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
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We are told that over the past year actual real GDP has risen by three percent. This fact alone is enough to tell us that
A) the unemployment rate has fallen. B) the inflation rate has risen. C) the actual real GDP is above natural real GDP. D) productivity has grown. E) none of the above.
If the total cost of production for 1000 widgets is $2000 and marginal cost is constant at $1, what is the average cost if 2000 widgets are produced?
A) $2 B) $1.50 C) $1 D) $0.50
Which of the following is true concerning the effects of inflation?
a. inflation hurts those on fixed incomes b. inflation benefits debtors c. inflation hurts creditors d. All of the above are true.
Which statement is true?
A. During prosperity, federal government borrowing crowds out a substantial amount of private investment. B. During recessions, federal government borrowing crowds out a substantial amount of private investment. C. Neither statement is true.