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
Answer: A
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Market failures occur when
A) externalities exist. B) economic efficiency increases. C) there is an increase in demand. D) there is a change in quantity demanded.
The greater the risk associated with a particular outcome, the ________ likely they will purchase insurance, and the ________ money they are willing to pay for the insurance.
A) more; more B) less; more C) less; less D) more; less
A quality-of-life index measures absolute poverty levels
a. True b. False Indicate whether the statement is true or false
Answer the following statement(s) true (T) or false (F)
1. The Clean Air Interstate Rule (CAIR) included an annual SO2 trading program. 2. NOX contributes both to acid rain and to the formation of ground-level ozone. 3. Because NOX readily moves across state borders, a series of interstate collaborations formedover time to address the problem, but none established a trading program. 4. Two new NOX cap-and-trade programs were launched under the Clean Air Interstate Rule (CAIR). 5. RECLAIM is a California trading program that used trading credits in a regional market for sulfur oxide and nitrogen oxide.