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
You might also like to view...
Which of the following changes would NOT shift the aggregate demand curve?
A) a change in fiscal policy B) a change in monetary policy C) a change in expectations about future income D) an increase in technology
Good news about an economic indicator __________ the denominator of a bond's valuation formula, __________ the bond's price
A) raises; raising B) raises; lowering C) lowers; raising D) lowers; lowering
The immediate objective of a nominal anchor is to reduce the variability of ________
A) monetary policy targets B) expected inflation C) aggregate demand D) central bank credibility
If the Fed wishes to raise the interest rate, it will
a. increase the money supply b. decrease the money supply c. increase money demand d. decrease money demand e. simply set a higher market interest rate