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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Use the following graph to answer the next question.
Which line in the graph above would best illustrate the transactions demand for money curve?
A. Line 1 B. Line 2 C. Line 3 D. Line 4
Under a fixed exchange rate regime, if the domestic currency is initially ________, that is, ________ par, the central bank must intervene to sell the domestic currency by purchasing foreign assets
A) overvalued; below B) overvalued; above C) undervalued; below D) undervalued; above
Which of the following is not a common property?
A) a city park B) a main street C) a public beach D) a movie screening
For a competitive, profit-maximizing firm, the demand curve for labor will shift in response to a change in the
a. wage rate. b. quantity of labor demanded. c. price of the product that the firm sells. d. an increase in the supply of labor.