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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In today's economy, dollar bills serve as money because
A) people have confidence that others will accept them as money. B) they are backed by gold. C) they have a value as a commodity independent of their use as money. D) they can be redeemed for gold by the Federal Reserve.
The national debt is a larger percentage of GDP now than at any time since 1900
Indicate whether the statement is true or false
Saying "the marginal costs are greater than the marginal benefits" is the same as saying
A) the average costs are greater than the average benefits. B) the total costs are greater than the average benefits. C) the benefits are greater than the costs. D) the additional costs are greater than the additional benefits. E) the costs minus the benefits equal the net costs.
Figure 11-2
Which graph in Figure 11-2 best reflects a Keynesian view of the impact of a $500-per-person tax cut?
a.
1
b.
2
c.
3
d.
4