The Economy's Self-Correcting Mechanism

question 169

Multiple Choice

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.

---

Definitions:

Money

An officially issued legal tender generally accepted in exchange for goods and services and repayment of debts.

Checking Account Balances

The amount of money currently available in one’s checking account, reflecting all deposits and withdrawals made.

Traveler's Checks

A preprinted, fixed-amount check designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege.

Credit Cards

Financial instruments that allow users to borrow funds from a pre-approved limit to pay for goods and services, with the expectation of paying back the borrowed amount along with any applicable interest.