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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The worst drought in over 50 years has decimated crops of soy beans and corn in the United States. (Source: New York Times, August 10, 2012). Because the production of corn has decreased, prices are expected to increase by 25 percent
These data are insufficient for calculating the elasticity of demand because we also need to know the A) percentage increase in income. B) percentage increase in quantity. C) percentage decrease in quantity. D) increase in bushels per acre.
If opening an economy up to trade always benefits both trading partners, why is free trade controversial?
What will be an ideal response?
Nominal interest rates are higher than real interest rates as long as
A) expected inflation is positive. B) the government taxes interest income. C) inflation is expected to decline in the future. D) long-term interest rates are higher than short-term interest rates.
In Figure 45.2, at the perfectly competitive equilibrium, the wage will be 
Figure 45.2
A. between W1 and W2. B. W1. C. W2. D. W*.