To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
You might also like to view...
Fixed exchange rates are often maintained in all of the following ways except ________.
A. controls on imports and exports, such as tariffs and quotas B. open speculation by individual traders in foreign currency markets C. domestic macroeconomic adjustments using monetary and fiscal policies D. international monetary reserves held by central banks
Which of the following is a long-run impact of an increase in the wage?
A. The quantity demanded of labor increases because there are no diminishing returns. B. The quantity demanded of labor increases because the marginal revenue product curve shifts upward due to a higher product price. C. The quantity demanded of labor decreases because firms face a higher degree of diminishing returns. D. The quantity demanded of labor decreases because firms will have an incentive to use more of other inputs instead of labor.
Which of the following definitions is correct?
A. Economic profit - Accounting profit = Explicit costs. B. Economic profit - Implicit costs = Accounting profits. C. Economic profit = Accounting profit - Implicit costs. D. Accounting profit + Economic profit = Normal profit.
If the supply curve for land was a vertical line, then any payment made for land would be considered
A. as an opportunity lease payment. B. as economic lease. C. as economic rent. D. as economic interest.