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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A decrease in the real interest rate in the United States will cause the dollar to ________ relative to other currencies and ________ net exports and real GDP
A) appreciate; increase B) appreciate; reduce C) depreciate; increase D) depreciate; reduce
The first law of demand states that
a. the quantity demanded increases as price falls b. the quantity demanded decreases as price falls c. the quantity demanded increases as price increases d. none of the above
Mountain bikers and rollerbladers share the only trail in a city park. The city allows everybody into the park and onto the trail. The mountain bikers say the rollerbladers are a hazard to them; the rollerbladers say it's the other way around. Frequently there are collisions and many injuries occur. Which of the following ways of dealing with the problem does not implicitly grant someone a
property right? a. Allow bikers to use the trail on odd-numbered days and rollerbladers to use it on even-numbered days. b. Allow bikers to use the trail in the morning and rollerbladers to use it in the afternoon. c. Allow only bikers in the park because they have invested in the more expensive sports equipment. d. Kick everybody out of the park. e. Build another trail, put rollerbladers on one and bikers on the other, and give bikers the right-of-way at intersections.
The English economist, Thomas Malthus, believed that sustained growth of income per person would be impossible because of
a. rapid growth of capital formation if population increased above the subsistence level. b. rapid growth of population if income increased above the subsistence level. c. rapid growth of government if income increased above the subsistence level. d. political democracy if income increased above the subsistence level.