In a self-regulating economy, inflationary and recessionary gaps
A) never occur.
B) are eliminated by forces internal to the economy, without government intervention.
C) are eliminated by timely actions of government policymakers.
D) are the desirable results of microeconomic price adjustments.
B
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The potential money multiplier gives us
A) the maximum potential change in the money supply due to a change in reserves. B) the growth in real national income when the money supply increases. C) the maximum potential change in the money supply due to a change in income. D) the growth in the money supply when income increases.
In the above figure, the economy is initially at point B. If taxes increase, there is
A) a movement to point C. B) a movement to point A. C) a shift to AD2. D) a shift to AD1.
A negotiable large-denomination certificate of deposit is an example of a
A) capital market instrument to finance capital acquisitions. B) money market instrument to finance inventories and short-term receivables. C) type of stock held by financial institutions. D) type of stock held by individuals.
Which is NOT a weakness of the policy of mandatory separation of recyclables?
A) It actually pays people to use more recyclable material, and thus more material in total. B) It is costly for households in terms of time spent. C) It is costly for the government to monitor. D) Individuals may shift away from recyclable to non-recyclable materials just so they don't have to bother to separate them. E) Implementation is difficult and consumes household space.