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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In the long run, the price elasticity of demand is ________ than in the short run because ________
A) less; consumers have more time in which to make adjustments to price changes B) less; the percentage change is measured over a larger amount of time C) greater; consumers have more time in which to make adjustments to price changes D) greater; firms have more time to shift the burden of the tax forward to consumers
A tariff imposed on imported shoes will cause the domestic price of shoes to ________ and the domestic production of shoes to ________.
A. decrease; decrease B. decrease; increase C. increase; decrease D. increase; increase
If actual reserves in the banking system are $8,000, checkable deposits are $70,000, and the legal reserve ratio is 10 percent, then excess reserves are:
A. $2,000. B. $500. C. zero. D. $1,000.
The elasticity of resource demand will be greater the:
A. smaller the portion of the product's total costs accounted for by the resource. B. less the elasticity of demand for the product it is producing. C. easier it is to substitute other resources in production. D. less the elasticity of resource supply.