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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The above table gives data for the nation of Mouseville. There are no imports into or exports from Mouseville. The equilibrium level of real GDP is
A) $700 billion. B) $500 billion. C) $800 billion. D) $900 billion. E) $100 billion.
What important lesson did American economists learn in the 1980s and again in 2001-2003?
a. Large tax cuts can lead to a balance of trade surplus. b. Large government budget deficits can crowd out consumption. c. Large government budget deficits can bankrupt the nation. d. Large government budget deficits can crowd out net exports.
Refer to the information above. The real exchange rate (from the United States' perspective) is
A) .625. B) .8. C) 1.6. D) 2.0. E) none of the above
Most favored nation (MFN) status means that a country treats another country
A) better than its other trading partners. B) the same as its other trading partners. C) worse than its other trading partners. D) any way it chooses since it is the "most favored nation."