The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending.
B. recessionary gaps.
C. expansionary gaps.
D. unemployment.
Answer: B
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If you use $500 of currency to make a deposit in a saving deposit
A) M1 decreases, but M2 is unchanged. B) M1 decreases and M2 increases. C) M1 is unchanged, but M2 increases. D) M1 and M2 both increase.
Taiwan and Jamaica are both islands that have pursued export-oriented development strategies, but Jamaica has experienced increases in unemployment and poverty, while Taiwan has experienced decreases. How might you explain this?
What will be an ideal response?
Which of the following is an example of a permanent resource price differential?
a. When the price of oil increases, oil exploration increases. b. When the price of CDs falls, CD production decreases. c. When demand for land in a city increases, its price increases above prices of land elsewhere. d. When demand for computer programmers increased, more people went into that field. e. When the price of oil rose, demand for solar panels increased.
An important effect of foreign currency speculators is that
a. they have consistently lost money and have left the market. b. they have pushed exchange rates to wider extremes than most economists predicted. c. they actually limit the volatility of exchange rate movements. d. they have had no effect at all on exchange rate volatility.