The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending.
B. recessionary gaps.
C. expansionary gaps.
D. unemployment.
Answer: B
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Which of the following statements is correct?
A. The demand for capital is derived from the demands for outputs. B. The demands for output are derived from the demand for capital. C. The demand for capital is derived from the demand for rent. D. The demand for rent is derived from the demand for capital.
Insurance companies
A) pool risk and thereby lower people's utility. B) can earn a profit only if people are risk neutral. C) can increase risk averse people's utility. D) try to shift their customers' utility of wealth curves downward.
Borrowing to finance the increases in government expenditures
A) reduces current private investment expenditures. B) increases interest rates. C) reduces growth in the nation's private capital stock. D) all of the above.
Which of the following decreases aggregate supply?
A) discoveries of new raw materials B) an increase in competition C) an increase in training and education D) a decrease in labor supply