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

Economics

You might also like to view...

In the HO model, the production possibility frontier is bowed out due to the assumption of

A) identical tastes. B) different factor intensities in the production of the two goods. C) increasing returns to scale. D) Two of the above.

Economics

Implicit cost involves a direct cash payment for the use of a resource

a. True b. False

Economics

People who enjoy the benefits of a public good without paying for them are called:

a. spillover parties. b. external consumers. c. free riders. d. antitrust violators.

Economics

U.S. GDP excludes the production of most illegal goods

a. True b. False Indicate whether the statement is true or false

Economics