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
You might also like to view...
Convergence means that
A) if poor countries grow fast, then fast growing countries are poor. B) all countries grow at the same rate. C) all countries tend towards the same per capita income. D) the savings rate is positively related to per capita income.
Assume the central bank decides to raise the discount rate. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the right. b. Start the analysis in the real credit market with demand for real credit shifting to the left. c. Start the analysis in the real credit market with demand for real credit shifting to the right. d. Start the analysis in the real credit market with supply of real credit shifting to the left. e. Start the analysis in the real credit market with supply of real credit shifting to the right.
When the inflation rate is expected to be zero, Steve plans to lend money if the interest rate is at least 4 percent a year and Cindy plans to borrow money if the interest rate is no more than 4 percent a year. Steve and Cindy make a loan agreement for one year at an interest rate of 4 percent a year when the inflation rate is zero. But if Steve and Cindy expect an inflation rate of 1 percent a year, they would be willing to make a loan agreement at ________ a year
What will be an ideal response?
A U.S. family flies from Boston to Shanghai on a China Airlines plane. This transaction is
A) considered an export of service in the U.S balance of payment accounts. B) a deficit item in the balance of payment accounts of China. C) Both of the above are correct. D) none of the above.