Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential
B. recessionary; higher; potential
C. recessionary; lower; lower
D. expansionary; higher; higher
Answer: A
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At Revolution Doughnuts in Fort Collins, Colorado, a cup of coffee or a doughnut is $1. Suppose Hannah loves going to Revolution Doughnuts. She spends $5 a day at the shop on 3 doughnuts and 2 cups of coffee. Is Hannah maximizing her total utility?
A) No. B) Maybe, but I need to know more about Hannah's income. C) Yes. D) Maybe, but I need to know more about Hannah's marginal utility per dollar for each of the two goods.
When two single-product firms that produce complimentary products merge into a single firm, that firm will want to raise prices of the two products
Indicate whether the statement is true or false
The country of Wiknam has net capital outflow of $1,000 . government purchases of $5,000 and consumption of $20,000 . Which of the following is correct?
a. If its domestic investment is $1,000 . its GDP is $26,000. b. If its domestic investment is $2,000 . its GDP is $28,000. c. If its domestic investment is $5,000 . its GDP is $29,000. d. None of the above are correct.
Explain why some argue that income tax loopholes primarily benefit the rich.
What will be an ideal response?