Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher
B. expansionary; higher; potential
C. recessionary; higher; potential
D. recessionary; lower; lower
Answer: B
You might also like to view...
The short-run aggregate supply curve shows that inflation will change as a result of changes in ________
A) output B) potential output C) expected inflation D) price shocks E) all of the above
With expansion in the level of output, total fixed cost:
a. declines but remains positive. b. increases. c. falls to zero. d. remains constant. e. becomes negative.
An economy's resources:
a. are limited in quantity. b. are always efficiently utilized. c. consist of land, labor, capital, and money. d. are unrelated to its standard of living. e. are unlimited when we use the latest technology.
Suppose the average price of a Big Mac in the United States is $3.50 while in Japan the average price is 400 yen. If the market exchange rate is that 1 dollar is exchanged for 100 yen, the purchasing power parity model of exchange-rate determination suggests that
A. the price of a Big Mac in Japan will rise. B. the yen is overvalued. C. the dollar will depreciate against the yen. D. the yen value is about correct.