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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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.
When the Fed sells $100 worth of bonds to a primary dealer, reserves in the banking system
A) increase by $100. B) increase by more than $100. C) decrease by $100. D) decrease by more than $100.
The Phillips curve appeared to fit the data well for the United States in the
A. 1960s. B. 1970s. C. 1990s. D. 1980s.
Those that lose from an increase in the minimum wage are
A. consumers who pay lower prices for goods. B. all workers. C. those workers who keep their jobs. D. employers.