If an industry is in long-run perfectly competitive equilibrium
A. all firms will be earning economic profits.
B. most firms will be earning economic profits.
C. a few firms will be earning economic profits.
D. no firm will be earning an economic profit.
D. no firm will be earning an economic profit.
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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
Suppose total government spending is increased permanently by ten percent, with no change in tax rates. In the long run, the resulting deficit will disappear, ________
A) only if government spending is brought back down to the original level B) if economic growth raises tax revenue by ten percent C) if the government debt is sold to foreigners D) unless the money is spent entirely on government consumption
Effective price ceilings and price floors:
A. make the rationing function of free markets more efficient. B. cause surpluses and shortages, respectively. C. interfere with the rationing function of prices. D. shift demand and supply curves and therefore have no effect on the rationing function of prices.
In the classical IS-LM/AD-AS model, a beneficial productivity shock would ________ output, ________ the real interest rate, and ________ the price level.
A. increase; decrease; decrease B. decrease; decrease; increase C. increase; increase; decrease D. increase; decrease; increase