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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An increase in the discount rate would:
A) decrease bank borrowing of reserves and reflect an expansionary monetary policy. B) decrease bank borrowing of reserves and reflect a contractionary monetary policy. C) increase bank borrowing of reserves and reflect an expansionary monetary policy. D) increase bank borrowing of reserves and reflect a contractionary monetary policy.
In a perfectly competitive market,
A) firms can freely enter and exit. B) firms sell a differentiated product. C) transaction costs are high. D) All of the above.
The balance of payments constraint refers to the limits on:
A. exchange rate policy imposed by flexible exchange rates. B. currency convertibility observed in most developing countries. C. domestic macroeconomic policy, arising from a shortage of international reserves. D. macroeconomic policy resulting from IMF conditionality.
Which of the following is NOT a type of incentive?
What will be an ideal response?