The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output.
B. government policy.
C. decreasing inflation only.
D. increasing or decreasing inflation.
Answer: D
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Based on the following information, calculate public saving, net foreign investment, and national income. Assume that the capital account is zero and net transfers are zero
private saving = $145 billion exports = $285 billion imports = $240 billion consumption = $600 billion private investment = $125 billion government purchases = $75 billion
The following combinations of goods X and Y represent various market baskets. Consumption is measured in pounds per month
Market Basket Units of X Units of Y A 4 6 B 16 7 C 15 3 D 3 2 Explain which market basket(s) is(are) preferred to other(s), and if there is any uncertainty over which is preferable, point this out as well.