By What Mechanism Does the Economy Always Return to Full

question 11

Multiple Choice

By what mechanism does the economy always return to full employment after a demand shock in the short run?

• A) Wages automatically adjust themselves.
• B) The interest rate automatically adjusts itself.
• C) Prices automatically adjust themselves.
• D) Taxes automatically adjust themselves.
• E) Rents automatically adjust themselves.

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Definitions:

Coercive Patriotism

A form of patriotism enforced through pressure, compulsion, or threats, often by a government or societal group, demanding loyalty or conformity from its citizens.

Committee on Public Information

A government agency created during World War I to influence public opinion and promote support for the war through propaganda.

Debs's Piece

Refers to writings or speeches by Eugene V. Debs, an American socialist, political activist, trade unionist, and five times the candidate of the Socialist Party of America for President of the United States.

Great Migration

The movement of over six million African Americans from the rural Southern United States to urban areas in the North, Midwest, and West from approximately 1916 to 1970, seeking better job opportunities and living conditions.