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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If the CPI basket costs $35 in the base period but costs $42, what is the CPI in the next period?
A) 83.3 B) $42 C) 20 percent D) 120
An American buys a Japanese car, paying by writing a check on an account with a bank in New York. How would this be accounted for in the balance of payments?
A) current account, a Japanese good import B) current account, a U.S. good import C) financial account, a U.S. asset import D) financial account, a U.S. asset export E) a current account as a U.S. good import and a financial account, a U.S. asset export
If Md = 1,000 – 400r and Ms = 2,000, the MPC = .85, G=100, and T = 120, then the equilibrium interest rate is
a. 2.5 b. 5 c. 10 d. 20 e. not enough information was given.
Refer to the graph shown. If the firm increases output from 30 to 40, total revenue will increase:
A. more than total cost, and so profit will decrease. B. less than total cost, and so profit will decrease. C. more than total cost, and so profit will increase. D. less than total cost, and so profit will increase.