Overshooting occurs because:
a. expectations adjust slower than prices.
b. expectations adjust at the same rate as prices.
c. expectations adjust faster than prices.
d. expectations do not adjust.
Ans: c. expectations adjust faster than prices.
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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.
The tradeoffs between rates of employment and inflation during the 1970s and 1980s forced economists to reassess their earlier beliefs about the Phillips curve to conclude that
a. the Phillips curve was upward sloping, not downward sloping as imagined b. rather than there being one Phillips curve, there is a set of such curves c. the expected trade-offs did not occur, meaning that policy to lower unemployment rates would not cause inflation d. the aggregate supply curve was a horizontal-vertical (two sides of a right angle) curve, as Keynesians believed e. the aggregate supply curve actually sloped downward because price levels fell whenreal GDP rose
For legal purposes, a corporation is treated as
a. an individual. b. a nonprofit organization. c. a partnership. d. a limited partner in a partnership.
The investment decision is made in the short run.
Answer the following statement true (T) or false (F)