During a recession the Keynesian consumption theory predicts that the savings rate will ________ and the ________ theory that savings rate will ________

After the terrorist attacks on September 11, 2001, the United States began devoting substantial resources toward the War on Terrorism, homeland security, and relief efforts. As long as our resources were being used efficiently, the production possibilities curve would suggest that:

a. we will have to give up the production of other goods that could have been produced with these resources. b. we will be able to produce the same amount of other goods as before. c. the military spending will result in an outward shift in the production possibilities curve but that the relief effort will result in an offsetting inward shift. d. we will be unable to devote the resources necessary toward these efforts unless there is an improvement in technology.

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.