The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending.
B. recessionary gaps.
C. expansionary gaps.
D. unemployment.
Answer: B
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What is a better pricing strategy for the monopolist? At this price, what are the total profits to the monopolist?
a. Bundle the goods at $2,800 . Profits=$5,600 b. Bundle the goods at $4,000 . Profits=$8,000 c. Charge $2,800 for good 1 and charge $1,700 for good 2; Profits=$4,500 d. Charging the lowest price for each good individually is the best pricing strategy; profits = $7,000
Which of the following statements is true about empty cores?
a. It is individually rational to form coalitions when cores are empty. b. There are no unblockable payoff allocations. c. The only way to prevent blocking is side payments among coalition members. d. Empty cores leave each person with payoff just equal to their production values.
Which of the following statements about monetary policy is correct?
a. Whatever happens with aggregate supply and aggregate demand in the long run, monetary policy can be used to prevent inflation from becoming entrenched in the economy in the short and medium term. b. Whatever happens with aggregate supply and aggregate demand in the short run, monetary policy can be used to prevent inflation from becoming entrenched in the economy in the medium and long term. c. Whatever happens with aggregate supply and aggregate demand in the short and medium run, monetary policy can be used to prevent inflation from becoming entrenched in the economy in the long term. d. Whatever happens with aggregate supply and aggregate demand in the medium and long run, monetary policy can be used to prevent inflation from becoming entrenched in the economy in the short term.
Which of the following is an example of an externality?
A. Drug abuse affecting David’s health B. Sara taking a break from work C. A transaction between two parties, affecting them alone D. Tom’s smoking affecting his roommate’s health