Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher
B. expansionary; higher; potential
C. recessionary; higher; potential
D. recessionary; lower; lower
Answer: B
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If the government runs a budget deficit, then
A) national saving is negative. B) household but not business saving must pay for the deficit. C) part of household and business saving finances the deficit. D) national saving cannot fund investment.
Adkins Air is the only seller offering service directly from Milwaukee to Greensboro. The market is contestable. Thus the Nash Equilibrium for a game between Adkins Air and a potential entrant is when the potential entrant
A) enters and Adkins earns a normal profit. B) enters and Adkins earns an economic profit. C) does not enter and Adkins earns a normal profit. D) does not enter and Adkins earns an economic profit.
Among all unbiased estimators that are weighted averages of Y1,..., Yn , is
A) the only consistent estimator of µY. B) the most efficient estimator of µY. C) a number which, by definition, cannot have a variance. D) the most unbiased estimator of µY.
"Hicks' Third Law of Demand" states that "most" goods must be:
a. gross substitutes. b. gross complements. c. net substitutes. d. net complements.