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
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Which of the following is true of the Federal Reserve System? a. It is one central bank located in Washington, DC
b. It was created just before World War II. c. All Federal Reserve banks are required to also become state banks. d. With the formation of the Fed, the power to issue bank notes was taken away from national banks and turned over to the state banks. e. It was notably unsuccessful in averting the Great Depression.
Expenditures by households on education are included in the investment component of GDP
a. True b. False Indicate whether the statement is true or false
When a nation opens itself to trade in a good and becomes an importer,
a. producer surplus and total surplus increase, but consumer surplus decreases. b. producer surplus decreases, but consumer surplus and total surplus both increase. c. producer surplus, consumer surplus, and total surplus all increase. d. producer surplus decreases, consumer surplus increases, and so the impact on total surplus is ambiguous.
Disposable income is defined as
A) national income - transfers + taxes. B) national income + transfers + taxes. C) national income + transfers - taxes. D) national income - transfers - taxes.