Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential
B. expansionary; higher; potential
C. recessionary; lower; potential
D. recessionary; lower; lower
Answer: C
You might also like to view...
A business cycle is:
a. the movement of the economy from peak to trough and trough to peak over time. b. a point of time comparison of economic activity. c. a prolonged movement in an upward fashion over a period of time. d. a prolonged movement in a downward fashion over a period of time.
Between 1945 and 1985, the number of farms declined and the average farm size increased, both of which suggest that
a. people were eating less food b. price support programs were enriching farmers c. farm incomes decreased d. land prices decreased e. large-scale farming was more efficient than small-scale farming
The consumption function will shift for all of the following reasons except
a. a change in a household's real assets b. a change in interest rates c. a change in expectations of price changes d. a change in a household's incomes e. a change in taxation policy
For a monopolistically competitive firm in long-run equilibrium,
A. the demand curve must intersect the average total cost curve at the ATC curve minimum. B. at the profit-maximizing quantity, the demand curve must be tangent to the average total cost curve. C. the demand curve must be tangent to the average total cost curve at the ATC curve minimum. D. at the profit-maximizing quantity, the demand curve must intersect the average total cost curve.