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
You might also like to view...
The largest component of national income is:
a) compensation of employees. b) rents. c) interest. d) corporate profits.
Large denomination time deposits are included in
A. M2 only. B. M3 only. C. M2 and M3. D. M1 and M2. E. M1, M2, and M3.
Assume the aggregate supply curve is horizontal and the economy is experiencing a recession. Which of the following is most likely to occur if the Fed pursues expansionary monetary policy?
A. The equilibrium price level and output will both decrease. B. The equilibrium price level will increase but output will stay the same. C. The equilibrium output will increase but the price level will stay the same until full employment is reached. D. The equilibrium price level and output will both increase.
Automatic Stabilizers
What will be an ideal response?