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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The "equilibrating mechanism," the reason the economy tends toward equilibrium in the simple Keynesian model, is primarily
A) autonomous but flexible prices. B) production responses to unplanned inventory changes. C) exogenous inventory changes. D) endogenous price changes.
The endogenous variable in the aggregate demand curve is ________
A) the real interest rate B) output C) inflation D) planned expenditure E) none of the above
If a firm spends money on advertising, its gross profit is ________ its net profit.
A) greater than B) exactly twice C) equal to D) less than
When the value of a payment is adjusted in proportion to changes in the CPI, economists refer to that as
a. nominalization b. realization c. indexation d. stabilization e. depreciation