Quiz 3 answer - 1) The self-correcting tendency of the...

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1) The self-correcting tendency of the economy means that rising inflation eventually eliminates *a. expansionary gaps. b. recessionary gaps. c. exogenous spending. d. induced spending. See the lecture note or text book. 2) To achieve long-run equilibrium in an economy with a recessionary gap, output will ______ and the inflation rate will _____. a. increase; increase *b. increase; decrease c. increase; not change d. decrease; decrease See the lecture note or text book. 3) If policymakers attempt to offset a favourable inflation shock with monetary _____, the resulting long-run equilibrium will be at _____ inflation rate compared with allowing the self-correcting mechanism to return the economy to potential output. a. tightening; a higher *b. tightening; a lower c. easing; a higher d. easing; a lower See the lecture note or text book. 4) Disinflation is a. negative inflation, also called deflation. b. a substantial increase in the rate of inflation. *c. a substantial decrease in the rate of inflation. d. a zero inflation. See the lecture note or text book. 5) Real GDP per person in Northland is $30,000, while real GDP in Southland is $10,000. However, Northland's real GDP per person is growing at 1 % per year and Southland's is growing at 3% per year. If these growth rates persist indefinitely, then a. Northland's real GDP per person will decline until it equals Southland's. b. Northland's real GDP per person will always be greater than Southland's. c. Southland's real GDP per person will always be less than Northland's. *d. Southland's real GDP per person will eventually be greater than Northland's. Use the formula for computing growth rate. 6) Growth of real GDP per person is totally determined by the growth of average *a. labour productivity and the proportion of the population employed. b. labour productivity and the proportion of the population in the labour force.
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c. labour force participation and the share of income going to capital. d. labour force participation and the share of the population employed. See the lecture note or text book. 7) Assume that the share of population employed in all countries is 50 per cent. Based on the information below, which country has the highest real GDP per capita? Country
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This note was uploaded on 08/18/2011 for the course ECON 1002 taught by Professor Markmelatos during the Three '10 term at University of Sydney.

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Quiz 3 answer - 1) The self-correcting tendency of the...

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