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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In nonlinear models, the expected change in the dependent variable for a change in one of the explanatory variables is given by
A) ?Y = f(X1 + X1, X2,... Xk). B) ?Y = f(X1 + ?X1, X2 + ?X2,..., Xk+ ?Xk)- f(X1, X2,...Xk). C) ?Y = f(X1 + ?X1, X2,..., Xk)- f(X1, X2,...Xk). D) ?Y = f(X1 + X1, X2,..., Xk)- f(X1, X2,...Xk).
Suppose only 7 percent of Turkey's products go to the United States. Hence, an increase in U.S. imports from Turkey:
a. would have no significant effect on Turkey's domestic income. b. would significantly increase Turkey's domestic income. c. would significantly decrease Turkey's domestic income. d. would significantly increase U.S. domestic income. e. would significantly decrease U.S. domestic income.
The current account surplus is
A) an increasing function of disposable income and an increasing function of the real exchange rate. B) a decreasing function of disposable income and a decreasing function of the real exchange rate. C) a decreasing function of disposable income and an increasing function of the real exchange rate. D) only a decreasing function of disposable income. E) only an increasing function of the real exchange rate.
Suppose an oil company wants to make its total revenue as large as possible. It should charge a price at which the demand for oil is:
a. elastic. b. unitary elastic. c. inelastic. d. perfectly inelastic.