Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher
B. expansionary; higher; potential
C. recessionary; higher; potential
D. recessionary; lower; lower
Answer: B
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In the labor force, we include
A) hospitalized people. B) unemployed people. C) students, D) people on social security.
Which of the following products would most likely be produced in a monopolistically competitive market?
A) corn B) oil C) electricity D) pizza
The elasticity of demand for salt is: a. highly elastic
b. highly inelastic. c. equal to zero. d. infinitely elastic.
If the real interest rate in the economy is i and the expected rate of return on additional investment is r, then other things equal:
A. more investment will be forthcoming when i exceeds r. B. less investment will be forthcoming when r rises. C. r will fall as more investment is undertaken. D. r will exceed i at all possible levels of investment.