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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At full employment the unemployment rate equals the
A) cyclical unemployment rate. B) structural unemployment rate plus the frictional unemployment rate. C) structural unemployment rate plus the cyclical unemployment rate. D) structural unemployment rate.
An efficiency wage is designed to
A) keep the minimum wage from falling. B) keep the minimum wage from rising. C) to induce more employment. D) decrease the need for workers to search for jobs. E) induce more work effort.
Refer to Figure 13-3. Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP
A) A and B B) B and D C) A and C D) C and D
Factors that led to worsening financial market conditions in East Asia in 1997-1998 include
A) weak supervision by bank regulators. B) a rise in interest rates abroad. C) unanticipated increases in the price level. D) increased uncertainty from political shocks.