Suppose the economy is initially experiencing a recessionary gap. A reduction in the size of the budget deficit will cause which of the following in the short run?
A) a reduction in the size of the recessionary gap and increase in real GDP.
B) an increase in the size of the recessionary gap and decrease in real GDP.
C) an increase in inflation and increase in aggregate supply.
D) an inflationary gap.
B
You might also like to view...
People tend to "dress up" for job interviews, even though their clothes do not make them more productive in their positions. This situation is an example of
a. signaling. b. adverse selection. c. the principal-agent problem. d. moral hazard.
What is the relation between the unemployment rate and the proportion of unemployed workers who have been unemployed for 15 weeks or longer?
A) Both rise in recessions. B) Both rise in expansions. C) The unemployment rises in recessions but the proportion of unemployed workers who have been unemployed for 15 weeks or longer declines in recessions. D) The unemployment falls in recessions but the proportion of unemployed workers who have been unemployed for 15 weeks or longer rises in recessions.
A workers who is always honest with their cash drawer must be a good mother as well because she is "honest" and "honest" people raise good children. This thought process describes
a. discrimination b. trait management c. the halo effect d. laissez-faire
The Smoot-Hawley Act:
A. bound the world's nations to a gradual process of tariff reduction. B. established very high tariffs on goods imported to the United States. C. exempted American exporters from the Sherman Antitrust Act. D. established the reciprocal trade agreements program.