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
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The demand for labor depends primarily on the additional output produced as a result of hiring an additional worker and
A) the additional revenue received from selling the output produced as a result of hiring an additional worker. B) the payment made to the worker for producing the additional output. C) the number of workers willing to produce the additional output. D) the elasticity of demand for the output produced by the worker.
The production possibilities frontier is a diagram that shows:
a. the productively efficient combinations of two products that an economy can produce given the resources it has available. b. the productively efficient combinations of two products that can be produced on a worldwide basis given demand. c. the productively inefficient combinations of a single product that an economy can produce given the resources it has available. d. the productively efficient combinations of two products that an economy can produce regardless of if the resources are available.
Environmental quality is
a. a public good. b. best improved through government's prohibiting externalities. c. maximized when costs of pollution are external. d. minimized when optimal levels of pollution are produced.
If demand decreases while supply increases, then the equilibrium price
A. may increase, decrease, or stay the same. B. always increases. C. never changes. D. always decreases.