A stable monetary environment will typically lead to
a. inflation
b. producers and consumers better coordinating their decisions through markets.
c. independence of central banks.
d. increased trade deficits and limited budgets deficits.
b
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
If macaroni and cheese is an inferior good, then a decrease in income will result in
A) an increase in the demand for macaroni and cheese. B) a decrease in the demand for macaroni and cheese. C) an increase in the supply of macaroni and cheese. D) a decrease in the supply of macaroni and cheese.
Figure 14-8
Refer to . There is excess money demand at an interest rate of
a.
2 percent.
b.
3 percent.
c.
4 percent.
d.
None of the above is correct.
An increase in the home country's income will result in a(n) ___ in the home country trade balance, and an increase in foreign income will result in a(n) ___ in the home country trade balance.
a. fall; fall b. increase; increase c. increase; fall d. fall; increase