To illustrate the classical argument that "supply creates its own demand," the aggregate supply curve should be drawn:
a. downward-sloping.
b. upward-sloping.
c. horizontal.
d. vertical.
d
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
A supply curve that is vertical
A) is perfectly inelastic. B) is impossible. C) has an elasticity equal to 1. D) is perfectly elastic.
If you win $1 million in a lottery and are paid in installments,
a. the future value of these payments is $1 million b. the present value of these payments equals $1 million if the interest rate is zero c. the present value of these payments equals $1 million if the interest rate is 10 percent annually d. the present value of the payments exceeds $1 million if the interest rate is positive e. the future value of the payments is less than $1 million if the interest rate is negative
Fiscal policy includes changing the level of household taxes.
Answer the following statement true (T) or false (F)