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

Economics

You might also like to view...

A product can be classified as an inferior good if an increase in the income causes

a. A decrease in the quantity demanded b. A decrease in demand c. An increase in demand d. An increase in the quantity demanded.

Economics

Marginal product of capital

A) is the derivative of the production function with respect to a one unit change in labor. B) is the derivative of the production function with respect to a one unit change in capital. C) is the derivative of the marginal cost curve. D) none of these choices.

Economics

Which of the following is a lesson that can be learned from monetary policy during the Great Depression?

a. Monetary policy should be changed frequently in response to economic fluctuations. b. Prolonged periods of monetary contraction will retard economic growth. c. Low interest rates will direct an economy toward recovery. d. Monetary policy should focus on variables such as output and employment.

Economics

A four-firm concentration ratio measures

A) the fraction of an industry's sales accounted for by the four largest firms. B) the production of any four firms in an industry. C) how the four largest firms became so concentrated. D) the fraction of employment of the four largest firms in an industry.

Economics