If a country's goods exports are less than its goods imports, then it experiences a:
a. balance of payments surplus. b. balance of payments deficit.
c. balance of trade surplus. d. balance of trade deficit.
d
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If it is not possible to prevent others from sharing in the benefits of a good's consumption, we say that the good
a. is an economic bad b. is nonrival in consumption c. has the characteristic of non excludability d. is a private good
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
According to the textbook, demand and supply determine prices, and prices allocate scarce resources in the economy.
a. true b. false
Suppose a recession occurs as a result of a negative supply shock, and instead of the economy naturally working its way back to equilibrium, the government uses policy to shift the aggregate demand curve to fight the recession. Using policy this way would
A) bring real GDP back to potential GDP more quickly but would result in a permanently higher price level. B) bring real GDP back to potential GDP more slowly but would bring the price level back to the original price level more quickly. C) quickly result in a new, higher level of real GDP and a permanently lower price level. D) bring the price level back to its original level more quickly but would result in a permanently lower level of potential GDP.