The economy’s self-correcting mechanism
A. tends to push unemployment toward a specific point called the natural rate of unemployment.
B. works better at correcting inflationary gaps than recessionary gaps.
C. cannot work if the Phillips curve is vertical.
D. ensures that the economy will not have to endure a long period of high unemployment.
Answer: A
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If policy makers desire a $30 increase in output and the consumption function is C = 100 + .75(Y-T), then they must
a. increase government spending by $8. b. increase taxes by $10. c. cut government spending and taxes by $10. d. decrease taxes by $10.
A shift occurs in the supply curve for salt when:
a. the price of salt increases. b. improvements are made in the production process. c. salt is found to be associated with high blood pressure. d. consumers expect the price of salt to increase in the future.