Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential
B. expansionary; lower; potential
C. expansionary; higher; potential
D. recessionary; lower; lower
Answer: A
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When the government finances a shovel-ready project through taxes or borrowing, this will result in
A) lower taxes or interest rates, which will reduce private sector employment. B) lower taxes or interest rates, which will increase private sector employment. C) higher taxes or interest rates, which will reduce private sector employment. D) higher taxes or interest rates, which will increase private sector employment.
Which of the following is not a topic studied in Macroeconomics?
A. the unemployment rate B. the inflation rate C. the price of Dell computers D. gross domestic product
Fiscal policy may not be effective because it takes time for policymakers to implement a policy change, known as the ________ lag.
A. recognition B. implementation C. impact D. legislative
If the marginal product of a worker for a calculator manufacturer is 10 calculators, and the price of a calculator is $10, the firm's marginal revenue product is
A. $1.00. B. $10.00. C. $100.00. D. $1,000.00.