When economists refer to the economy’s self-correcting mechanism, they are referring to the fact that the
A. economy will react automatically to a recessionary gap through inflation.
B. economy will react automatically to an inflationary gap through deflation.
C. economy will react automatically to an inflationary gap through inflation.
D. simple multiplier is greater than the complex multiplier.
Answer: C
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A voucher can eliminate the deadweight loss and lead to an efficient outcome if the value of the voucher equals the ________ of the good
A) marginal external benefit B) marginal social benefit C) marginal private benefit D) marginal social cost
Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?
A) falling oil prices B) increases in housing prices C) a decline in government spending D) the financial crisis
A perfectly elastic demand curve
a. Is a horizontal line parallel to the x axis b. Has an elasticity of demand between 0 and 1 c. Is the demand curve of a product that usually has no substitutes d. None of the above
The more inelastic the demand for a product, the more the actual burden of a tax on the product will:
A. fall on sellers. B. fall on buyers. C. fall equally on both buyers and sellers. D. create a larger deadweight loss (or excess burden).