Before the Great Depression of the 1930s, most economists believed that
a. only active government policy could prevent recessions or inflation.
b. a capitalist economy had a natural tendency to cure recessions or inflation.
c. a capitalist economy had a natural tendency to inflation.
d. recessions and depressions were inevitable until the economy broke down completely.
b
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
In the automobile industry, workers have just negotiated a new contract giving workers a large raise. There has also been an increase in the number of licensed drivers who are in the market for a new car
In the market for new automobiles, the effects that these changes will have on the equilibrium price and quantity are A) price will increase, and quantity will decrease. B) price will increase, and the effect on quantity is indeterminate. C) price will decrease, and quantity will increase. D) price will decrease, and the effect on quantity is indeterminate.
In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices. B. lower prices. C. lower output. D. None of these is true.
According to the law of demand, the quantity demanded of a good is related to
A. the relative price of that good. B. the average price of all goods. C. any factor that affects the decision of an individual consumer but not the market. D. income.