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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When there is an increase in demand,
A. the demand curve shifts to the right of the original demand curve. B. the demand curve rotates clockwise. C. the demand curve shifts to the left of the original demand curve. D. the demand curve rotates counterclockwise. E. a lower price has increased the amount of the good that consumers will buy.
The rate of return on bonds is lower than on stocks over time because
A) bond holders cannot diversify. B) bonds have a lower standard deviation in returns. C) stocks have less non-diversifiable risks than bonds. D) bonds are subject to more random risks than stocks.
Financial capital is
A) the collection of stock and bond exchanges around the country. B) funds used to purchase capital goods. C) the foreign exchange market. D) assets of financial institutions.
After the Great Depression of the 1930s and particularly since World War II until the 1970s, the ideas of the __________ school became conventional wisdom
a. classical b. Keynesian c. monetarism d. supply-side e. rational expectations