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 a mixed economy, the ultimate decision about what to produce is left to
A) buyers. B) the government. C) sellers. D) all of the above
The clearest indicator of a switch to a less expansionary fiscal policy is a
A) rise in the actual deficit. B) fall in the actual deficit. C) rise in the natural employment deficit. D) fall in the natural employment deficit.
Money neutrality states that
A) with money, one can still use the representative agent. B) changes in money do not affect real aggregates. C) changes in inflation do not affect real aggregates. D) monetary policy is independent from politics.
For a fixed proportion production function, at the vertex of any of the (L-shaped) isoquants the marginal productivity of either input is:
a. constant. b. zero. c. negative. d. a value that cannot be determined.