The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output.
B. government policy.
C. decreasing inflation only.
D. increasing or decreasing inflation.
Answer: D
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In the Keynesian model, whenever planned investment is less than planned saving
A) the amount of planned investment will decrease, and real GDP will decrease. B) there will be an unplanned inventory increase, and real GDP will eventually decrease. C) there will be an unplanned inventory decrease, and real GDP will eventually increase. D) the amount of planned investment will decrease, and real GDP will remain unchanged.
Voting power in the IMF is determined by a country's
A) political power. B) quota. C) size. D) All of the above.
Refer to Figure 7.1. At output level Q3
A) average fixed cost reaches its minimum. B) average total cost reaches its minimum. C) average variable cost reaches its minimum. D) marginal cost reaches its minimum. E) all of the above
The problem caused when people are often reluctant to voluntarily pay for goods and services that provide benefits for everyone, even for those who don't pay is called the:
A. drop in the bucket hypothesis. B. rational ignorance problem. C. moral hazard problem. D. free-rider problem.