The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. unemployment.
B. expansionary gaps.
C. recessionary gaps.
D. exogenous spending.
Answer: C
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If the U.S. government enters the foreign exchange market and sells dollars to maintain a specific exchange rate with the yen, the dollar will ________ and the yen will ________
A) depreciate; depreciate B) depreciate; appreciate C) appreciate; depreciate D) appreciate; appreciate
The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. Bob is
A) risk averse. B) risk neutral. C) risk loving. D) risk premium.
Specialization of labor refers to the
a. use of more skilled versus unskilled labor b. division of labor c. opportunity costs of using labor d. law of increasing costs associated with labor e. comparative advantage of labor-using economies
Over three-fourths of the world's population lives in households that have an average income of less than ________ per year.
A. $1,000 B. $10,000 C. $4,000 D. $2,000