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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Transfer pricing is a method used to
A) determine whether a firm should make or buy a component product. B) determine the correct value of a product as it moves from one stage of production to another. C) minimize a multinational firm's tax liabilities. D) All of the above
When a corporation uses profits to pay for the purchase of new capital equipment, this is known as
A) reinvestment. B) a coupon payment. C) dividend. D) collusion.
Does a subsidy to buyers affect the demand curve?
A. Yes, it shifts demand up by the amount of the subsidy. B. Yes, it shifts demand to the right by the amount of the subsidy. C. No, the quantity demanded will increase, but the demand curve does not move. D. No, the quantity demanded will decrease, but the demand curve does not move.
Government regulation is
a. subject to the same problems of lack of information and lack of incentives for economic efficiency as centrally planned economies. b. the only reliable way to improve environmental quality. c. not subject to political concerns when it comes to environmental quality. d. the most economically efficient way to reduce greenhouse gases.