Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
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Suppose that most government spending was on capital goods that contribute to economic growth. How would that affect the Ricardian equivalence debate?
What will be an ideal response?
According to the crowding-out view, budget deficits will:
a. reduce interest rates. b. increase interest rates and retard private investment. c. reduce the investments of foreigners in the United States. d. increase the capital stock available to future generations.
Provide two specific ways in which reducing inflation might leave "permanent scars" on the economy
If a production possibilities frontier (PPF) is concave outward, it follows that
A) opportunity costs are constant between two goods. B) the opportunity cost (of producing the good on the horizontal axis) rises as more of the good is produced. C) the opportunity cost (of producing the good on the horizontal axis) falls as more of the good is produced. D) the opportunity cost (of producing the good on the horizontal axis) first rises and then falls as more of the good is produced. E) none of the above