Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
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When the economy is in short-run equilibrium, there will be ________ output gap.
A. only a recessionary B. no C. either a recessionary or an expansionary D. only an expansionary
Suppose Japan exports cars to Russia and imports wine from France. This situation suggests
a. Japan has a comparative advantage relative to France in producing wine, and Russia has a comparative advantage to Japan in producing cars. b. Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine. c. Japan has an absolute advantage relative to Russia in producing cars, and France has an absolute advantage relative to Japan in producing wine. d. Japan has an absolute advantage relative to France in producing wine, and Russia has an absolute advantage relative to Japan in producing cars.
In the long-run version of the aggregate demand and aggregate supply model, a shift in the aggregate demand curve:
A. can change the inflation rate as well as the real growth rate. B. can change the inflation rate, but not the real growth rate. C. can change the real growth rate, but not the inflation rate. D. can change neither the real growth rate nor the inflation rate.
The original objective of Social Security was
A. to prevent future depressions. B. to provide retirement fund for all persons. C. a proper response to the stock market crash of 1929. D. to raise the nation's saving rate.