Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
You might also like to view...
Which of the following checks issued by the government represents a transfer payment?
A) The federal government pays a defense contractor for development of a missile system. B) The federal government pays a retiree her Social Security benefits. C) The state of Oregon pays a construction firm for its work in repairing a state highway. D) The state of Illinois pays groundskeepers at the state capitol building their weekly wages.
The difference between GDP and final sales equals
a. depreciation. b. exports. c. imports. d. net inventory change.
Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real exchange rate and monetary base in the context of the Three-Sector-Model? Assume the nominal exchange rate is stated as: (Foreign currency per Domestic
currency). a. The real exchange rate rises and monetary base falls. b. The real exchange rate and monetary base fall. c. The real exchange rate and monetary base remain the same. d. The real exchange rate falls and monetary base rises e. There is not enough information to determine what happens to these two macroeconomic variables.
If country A can produce more of practically everything than can country B, then which of the following statements is true?
A. Country A has no incentive to trade with country B. B. Trade can benefit both countries. C. Country B cannot have a comparative advantage in the production of any good that country A wants to buy. D. Country B has no incentive to trade with country A.