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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A surplus will occur in a market if:
A. the quantity demanded at a given price is -less than the quantity supplied at that price. B. the quantity supplied at a given price exceeds the quantity demanded at that price. C. there are not enough sellers at the prevailing price. D. there are too many buyers at the prevailing price.
Which of the following is an expected effect of a tariff or a nontariff barrier (NTB) on a product?
A. An increase in domestic consumption of the imported product B. A decrease in the domestic production of the product C. An increase in the employment of labor and other resources used in the import-competing industry in the tariff-imposing country D. A decrease in government revenue
For a country pursuing a fixed exchange rate regime, what does the interest parity condition imply about domestic and foreign interest rates? Explain
What will be an ideal response?
Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive. Which of the following offers the best reason why some economists believe that
monopolistically competitive markets benefit consumers despite any loss of well-being? A) Although consumers may pay a price greater than marginal cost for a product, the product is produced at the minimum average total cost. B) Although consumers may pay a price greater than marginal cost and the product is not produced at minimum average total cost, they benefit from being able to buy a differentiated product more closely suited to their tastes. C) Consumers pay a price equal to the marginal cost of producing a product, even though it is not produced at the minimum average total cost. D) Consumers are better off choosing from a variety of differentiated products, even though product differentiation causes barriers that restrict entry into monopolistically competitive markets.