The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment.
B. exogenous spending.
C. recessionary gaps.
D. expansionary gaps.
Answer: D
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Which of the following statements is correct?
A. For a given nominal interest rate, the real interest will decrease if inflation decreases. B. For a given expected inflation rate, the nominal interest must increase if real interest decreases. C. For a given real interest rate, the nominal interest must increase if expected inflation increases. D. For a given real interest rate, the nominal interest must decrease if expected inflation increases.
Which of the following is NOT a reason that free trade stimulates economic growth?
A) Free trade encourages a more rapid spread of technology. B) Industries have larger markets. C) The importation of technically advanced products enables the country to imitate the technology. D) Free trade keeps domestic prices up, enabling firms to make more profits that can be spent on research and development.
A $10 per unit government subsidy paid directly to sellers of heaters will result in
a. a downward shift in the demand curve for heaters by $10. b. an upward shift in the demand curve for heaters by $10. c. a downward shift in the supply curve for heaters by $10. d. an upward shift in the supply curve for heaters by $10.
Rating agencies ______ the risk of mortgage-backed securities.
a. accurately assessed b. overestimated c. underestimated d. warned investors of