Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential
B. expansionary; lower; potential
C. expansionary; higher; potential
D. recessionary; lower; lower
Answer: A
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The substitution effect makes workers want to work less when the wage increases.
Answer the following statement true (T) or false (F)
Why are international investors who have invested in developing nations favoring foreign direct investment and portfolio investment over loans?
A) The process of making loans is usually more difficult for investors to do than foreign direct and portfolio investment. B) The interest rate charged on the loans is usually lower than what can be earned in the U.S. C) It is illegal for banks to make loans to foreign firms. D) Investors have an aversion to owning dead capital and want to make sure that the resources they own do not become dead capital.
Business structure has remained relatively stable over the history of American business
Indicate whether the statement is true or false
Private property provides an incentive to
A. save, but it fails to provide an incentive to work. B. both work and save. C. neither work nor save. D. work, but it fails to provide an incentive to save.