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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Grape juice prices increased by 20 percent in 2007. Suppose in response grape growers did not increase or decrease their grape production. The elasticity of supply is best described as
A) perfectly inelastic. B) perfectly elastic. C) inelastic. D) elastic.
As diseconomies of scale begin to outweigh the economies of scale,
A. the long-run average cost curve begins to slope upward. B. the long-run average cost curve begins to slope downward. C. the long-run average cost curve becomes horizontal and continues this way into infinity. D. the long-run average cost curve is unaffected.
Payment of interest on the U.S. public debt:
A. increases the current domestic standard of living in the United States. B. has no effect on the distribution of income. C. is thought to decrease income inequality. D. is thought to increase income inequality.
In the figure, curves 1, 2, 3, and 4 represent the:
A. ATC, MC, AFC, and AVC curves respectively.
B. MC, AFC, AVC, and ATC curves respectively.
C. MC, ATC, AVC, and AFC curves respectively.
D. ATC, AVC, AFC, and MC curves respectively.