The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier.
B. self-correcting property.
C. short-run equilibrium property.
D. long-run equilibrium property.
Answer: B
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In Figure 3-2, a point such as D
A. cannot be obtained with the current level of resources and technology. B. can never be obtained. C. can only be obtained by a capitalist society. D. represents a misallocation of resources.
If the demand for farm products is income elastic, that would mean that farm products were a necessity
Indicate whether the statement is true or false
If the marginal propensity to consume (MPC) decreases, then
A) the marginal propensity to save (MPS) decreases. B) the multiplier decreases. C) the multiplier increases. D) MPC + MPS is less than 1.
Assume a perfectly competitive industry is in long-run equilibrium at a price of $30. If this industry is an increasing-cost industry and the demand for the product increases, long-run equilibrium will be reestablished at a price
A. of $30. B. less than $30. C. greater than $30. D. either greater than or less than $30 depending on the magnitude of the decrease in demand.