The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment.
B. exogenous spending.
C. recessionary gaps.
D. expansionary gaps.
Answer: D
You might also like to view...
The presence of navigable rivers and fertile soil is seen as a source of economic prosperity under the:
A) location hypothesis. B) geography hypothesis. C) culture hypothesis. D) institutions hypothesis.
Which of the following statements is true?
A) Trade leads to inefficient allocation of resources. B) Trade discourages workers to specialize in production. C) International trade creates supply bottlenecks. D) Trade allows people to choose occupations that suit their talents.
In the case of an upward-sloping aggregate supply curve, the change in real GDP brought about by a change in government spending will be less than that predicted by the simple government purchases multiplier
Indicate whether the statement is true or false
Under the monetary approach to the exchange rate
A) an interest rate decrease is associated with higher expected inflation and a currency that will be weaker on all future dates. B) an interest rate increase is associated with higher expected deflation and a currency that will be weaker on all future dates. C) an interest rate increase is associated with higher expected inflation and a currency that will be strengthened on all future dates. D) an interest rate increase is associated with higher expected deflation and a currency that will be strengthened on all future dates. E) an interest rate increase is associated with higher expected inflation and a currency that will be weaker on all future dates.