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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Monetarists would likely argue that the severe recession of 2007-2009 was primarily caused by
A. too much deregulation of the financial sector in previous years. B. excessive money supply creating a bubble in some sectors of the economy. C. wide swings in investment expenditures driving erratic fluctuations in aggregate demand. D. adverse aggregate-supply shocks causing tremendous unemployment.
The above figure illustrates a perfectly competitive wheat farmer
a. What will be the firm's profit-maximizing price and output? b. When the farmer produces 25,000 bushels of wheat, the difference between the firm's average total cost and the price is at its maximum. Explain why this amount of wheat either is or is not the profit-maximizing quantity.
A central bank's attempt to prevent an appreciation of its currency can stimulate domestic inflation if the ________ of foreign currencies leads to ________ international reserves which ________ the monetary base
A) purchase; higher; increases B) purchase; lower; decreases C) sale; lower; decreases D) sale; higher; increases
When people become unemployed because of a higher minimum wage, this type of unemployment is called:
a. frictional. b. structural. c. cyclical. d. abnormal.