Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential
B. expansionary; higher; potential
C. recessionary; lower; potential
D. recessionary; lower; lower
Answer: C
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Based on this information, what would be the national standard for an allocatively efficient abatement?
Hypothetically, suppose a recent study of hazardous waste abatement (A) arrives at the following national estimates for abating chemical solvents: MSB = 100 – 0.75A and MSC = 20 + 0.50A, where A is measured in millions of tons per year, and costs are measured in millions of dollars.
Insurance is possible and can be profitable because of
A) private information. B) adverse selection. C) moral hazard. D) consumers are risk aversion.
Which of the following concepts should be LEAST associated with behavior economics?
A. Choices that are hard to reconcile with standard economic theory B. Rejection of highly-mathematical economic models C. The use of laboratory experiments D. Neuroeconomics
Define the term deadweight loss. Will there be a deadweight loss if a good's marginal cost exceeds its marginal value? Explain.
What will be an ideal response?