The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output.
B. government policy.
C. decreasing inflation only.
D. increasing or decreasing inflation.
Answer: D
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Real GDP is ________ determined in the classical model and ________ determined in the Keynesian model
A) supply; supply B) supply; demand C) demand; supply D) demand; demand
If a straight line passes through the point x = 12 and y = 4 and also through the point x = 4 and y = 8, the slope of this line is
A) negative 8 divided by 4. B) seven tenths. C) negative one half. D) one -and one half.
The government debt is the difference between the current level of total expenditures and revenues
Indicate whether the statement is true or false
In the above figure, the curve labeled MCL is the marginal cost of labor curve and is used in a
A) competitive situation in which individual firms cannot influence the wage rate they must pay. B) competitive situation in which skill differentials create a difference between what a firm must pay labor versus the wage at which households are willing to supply labor. C) monopsony situation in which the firm can influence wages by how much labor it hires, so that the wage rate received by workers is less than the marginal cost of labor. D) monopsony situation in which the firm can influence wages by how much labor it hires, so that the wage rate received by workers is greater than the marginal cost of labor.