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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Because cooperation dominates noncooperation as a strategy for maximizing profits, cheating is rarely if ever an issue that cartels have to contend with
Indicate whether the statement is true or false
A downward movement along the investment demand curve would be caused by a(n):
a. increase in the expected rate of return on investment caused by an increase in business confidence. b. decrease in the expected rate of return on investment caused by a decrease in business confidence. c. increase in the rate of interest. d. decrease in the rate of interest.
A rise in the overall price level means that:
A. a given number of dollars won't buy as much real goods and services. B. dollar-denominated assets have lost their value. C. the cost of living has gone down. D. None of these is true.
All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?
a. Incentives matter. b. The value of goods can be determined objectively. c. Economic thinking is marginal thinking. d. Information is scarce.