Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential
B. recessionary; higher; potential
C. recessionary; lower; lower
D. expansionary; higher; higher
Answer: A
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We can measure total production by:
A. adding up what people spend on final goods and services. B. adding up everyone's asset wealth. C. comparing cost of inputs to final sale price. D. adding up all spending in the economy on all goods and services.
Economists estimate that the total lag for monetary policy is about:
A. 1-2 days. B. 2 weeks to 1 month. C. 3-12 months. D. 2-4 years.
When markets are contestable, a monopoly firm must behave as if it had competitors, even though the market structure is monopolistic.
Answer the following statement true (T) or false (F)
Related to the Economics in Practice on p. 68: Assuming the demand for Baltimore newspapers increases while the supply of Baltimore newspapers decreases, the equilibrium ________ will definitely ________.
A. price; increase B. quantity; increase C. quantity; decrease D. price; decrease