Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential
B. expansionary; higher; potential
C. recessionary; lower; potential
D. recessionary; lower; lower
Answer: C
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Indicate whether the statement is true or false
Alex was willing to pay $50 for the new World Cup soccer ball. When he received it as a gift, he was willing to sell it, but for no less than $80. According to behavioral economists:
A. Alex's behavior is consistent with the endowment effect. B. Alex's behavior is irrational because of inconsistent anchoring. C. Alex should sell the ball if he's offered any amount over $50. D. Alex's behavior is irrational because his frame has changed.
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A. 50. B. 86. C. 107. D. 111.