Equilibrium GDP on the demand side occurs when total spending
a. equals total production, and inventories are zero.
b. equals total production, and firms are unable to adjust inventories.
c. exceeds total production, and inventories are rising.
d. equals total production, and inventories remain at desired levels.
e. is less than total production, and inventories are falling.
d
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Typically, increasing the difference between the discount and federal funds rates causes
A) an increase in market interest rates. B) high corporate profits. C) no change in interest rates. D) a boom in the economy.
The economy's self-correcting mechanism ensures that neither recessionary nor inflationary gaps will be eliminated eventually
a. True b. False Indicate whether the statement is true or false
The observation that people tend to value something more highly when they own it than when they don't is called the
A) wealth effect. B) endowment effect. C) path-dependent effect. D) endorsement effect.
The natural rate of unemployment is unemployment that occurs as a normal part of the functioning of the economy.
Answer the following statement true (T) or false (F)