When the short run aggregate supply curve shifts left, it ___ the short-run Phillips curve
a. Moves the economy up along
b. Moves the economy down along
c. Shifts right
d. Shifts left
c
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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
Government expenditures on housing subsidies at all levels total more than $45 billion a year
a. True b. False
Figure 16-2
Suppose that Figure 16-2 shows the effects of reducing the budget deficit by raising taxes. If authorities do not want real GDP to fall, monetary policy must
a.
become sufficiently more expansionary to restore the aggregate demand curve to D0D0.
b.
contract aggregate demand to be consistent with deficit-reducing fiscal policy.
c.
not lower interest rates and thwart the goal of a balanced budget.
d.
become more contractionary to lower the interest rate and spur investment.
Accounting profit is equal to:
A. total revenue minus explicit costs. B. total revenue minus implicit costs. C. total revenue minus explicit and implicit costs. D. economic profit minus implicit costs.