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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Let's assume that two countries have imposed high tariffs on each other's products and services to the point where all trade between the two countries has disappeared
Assume a newly elected member of parliament in one of the countries makes a proposal for unilateral tariff reduction regardless of whether the other country wishes to follow suit. Explain why such a policy change would actually be a good idea.
Refer to the figure above. In free trade A will import
A) 700 units from country C. B) 700 units from C and 600 units from B. C) 600 units from C. D) 600 units from C and 400 units from B.
Which of the following would be considered an example of a macroeconomic problem?
A) Should Microsoft reduce the price of its Windows operating system? B) Should the federal government extend the eligibility period for unemployment benefits? C) Should Mitsubishi eliminate one of its production shifts? D) Should JP Morgan Chase increase the interest rate it charges its credit card customers?
Sarah and David both have linear demand curves for lemonade. Sarah's demand curve for lemonade intersects David's demand curve at a price of 50 cents per glass. Sarah's demand curve is more inelastic than David's
A change in the price of lemonade from 50 cents to 25 cents per glass will A) decrease Sarah's consumer surplus more than David's. B) decrease David's consumer surplus more than Sarah's. C) increase Sarah's consumer surplus more than David's. D) increase David's consumer surplus more than Sarah's.