Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher
B. expansionary; higher; potential
C. recessionary; higher; potential
D. recessionary; lower; lower
Answer: B
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Long-term customer relationships ________ the cost of information collection and make it easier to ________ credit risks
A) reduce; screen B) increase; screen C) reduce; increase D) increase; increase
Policies adopted by the Truman administration effectively avoided inflation during the Korean War. These policies included:
a. increased personal and corporate tax rates. b. price and wage controls. c. reduced purchases of government debt by the Federal Reserve. d. discontinuance of the practice of "pegging" interest rates. e. All of the above.
Which of the following statements best describes the circumstances in which exchange rates are beneficial to bank or government borrowing?
a. A bank or government will benefit by borrowing in a domestic currency and lending in a foreign currency, provided the exchange rate does not shift. b. A bank or government will benefit by borrowing in a foreign currency and lending in a domestic currency works well, provided the exchange rate does not shift. c. A bank or government will benefit by borrowing in a foreign currency and lending in a domestic currency works well, provided the exchange rate increases. d. A bank or government will benefit by borrowing in a foreign currency and lending in a domestic currency works well, provided the exchange rate decreases.
If a firm is inundated by qualified applicants when it advertises a job opening and the firm's quit rate is unusually low, then the firm is probably paying
A. each worker its marginal revenue product. B. above the market wage. C. the market wage. D. below the market wage.