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.
Answer: B
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According to economic theory, a person
A) wants to advance his or her own interests and will try to do it rationally. B) would not generate negative externalities if one has a properly-developed social conscience. C) acts in a profit-seeking way in the market process and in a social-seeking way in government processes. D) necessarily behaves as an individualist in markets and as a socialist in government.
The average level of effective protection has exceeded 300% for which of the following countries?
(a) Pakistan and Uruguay. (b) Argentina and Brazil. (c) Philippines and Mexico. (d) India and China.
The real wealth effect explains that higher prices
a. make people worse off by reducing the value of their wealth, leading them to save more and spend less b. make people worse off by reducing the value of their wealth, leading them to save less and spend more c. make people better off by increasing the value of their wealth, leading them to save less and spend more d. increase borrowing, leading to higher interest rates and less investment e. make domestic goods relatively more expensive, increasing the demand for domestic goods and decreasing the demand for foreign goods
Arcadia faced very high levels of unemployment for three consecutive years. This caused social disruptions, riots, and finally the replacement of the government. In this scenario, unemployment has resulted in _____
a. a loss of lifetime earnings b. a loss of human capital c. the deterioration of health d. a loss of social cohesion