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
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The Lucas Wedge is estimated to
A) total over $406,000 per person as a result of the slowdown in the growth rate of real GDP. B) be positive in some years and negative in others. C) be about 2 percent of real GDP per year. D) be negative due to the severe recession in 2008-2009. E) have reached about $13,000 per person in the last year.
Deadweight loss measures the loss
a. in a market to buyers and sellers that is not offset by an increase in government revenue. b. in revenue to the government when buyers choose to buy less of the product because of the tax. c. of equality in a market due to government intervention. d. of total revenue to business firms due to the price wedge caused by the tax.