The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier.
B. self-correcting property.
C. short-run equilibrium property.
D. long-run equilibrium property.
Answer: B
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There is no completely satisfactory way to define the money supply in the United States because
A) data on the money supply are always approximate and only available after a time lag of several months. B) much of it is held by the public and so cannot be monitored by the Fed. C) the Federal Reserve uses a number of different definitions. D) the liquidity of any asset is a matter of degree.
An economic principle that explains why countries produce different goods and services is
A) trade as a percentage of GDP. B) absolute advantage. C) NAFTA. D) comparative advantage.
The substitution effect is the concept that changes in consumption of a good result from changes in the relative price of a competing good
a. True b. False Indicate whether the statement is true or false
Among the most important demand side factors explaining homes prices would be the
A. average wage paid to carpenters. B. cost of lumber. C. number of homebuilders. D. income of potential homebuyers.