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 MPC gets smaller, the spending multiplier:
a. gets larger. b. gets smaller. c. stays the same. d. gets smaller at low real GDP, and larger at high real GDP. e. gets larger at low real GDP, and smaller at high real GDP.
Assume, for the U.S., that the domestic price of beef without international trade is lower than the world price of beef. This suggests that with trade,
a. the U.S. has a comparative advantage in the production of beef over other countries and the U.S. will export beef. b. the U.S. has a comparative advantage in the production of beef over other countries and the U.S. will import beef. c. other countries have a comparative advantage over the U.S. in the production of beef and the U.S. will export beef. d. other countries have a comparative advantage over the U.S. in the production of beef and the U.S. will import beef.
According to the text, one of the disadvantages of our current welfare system is that
A. it gives the poor too much money. B. it provides incentives for the poor not to work. C. it works in the opposite direction of Rawl's view of justice. D. it is biased in favor of rich people.
Which of the following is true concerning purely competitive industries?
A. There will be economic losses in the long run because of cut-throat competition. B. Economic profits will persist in the long run if consumer demand is strong and stable. C. In the short run, firms may incur economic losses or earn economic profits, but in the long run they earn normal profits. D. There are economic profits in the long run but not in the short run.