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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As concentration in an industry increases, the value of the Herfindahl index falls
a. True b. False
In 1971, a bank worker could process 265 checks in 1 hour. Currently, computers with built-in reader-sorter processing capacity have pushed that number above 100,000 checks per hour. Economists describe this type of activity as
a. exploitation of labor. b. an increase in labor productivity. c. speed-up. d. comparative advantage. e. mutual gains from voluntary trade.
According to Adam Smith, what is the primary source of a nation's wealth?
A. the amount of gold and silver in the government's possession B. a spirit of cooperation in which people share according to their means C. strong central planning authorities D. the people's ability to produce products and trade in free markets
Figure 17.3 describes the labor market for a manufacturing industry. In the short run, an increase in the price of the good made by the workers will:
A. cause the equilibrium wage and the hours of labor used to increase. B. not have an effect on this market. C. cause the equilibrium wage to increase but will not change the hours of labor used. D. cause the equilibrium wage and the hours of labor used to decrease.