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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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
What is the free-rider problem? What results from the free-rider problem? What is a solution to the free-rider problem?
What will be an ideal response?
Juliana, Gabrielle, and Marcela want to start a business they are the only owners and the company does not issue stock. The type of business they want to start is a
A) partnership. B) corporation. C) sole proprietorship. D) Any of the above could be correct.
What is investment in a closed economy if you have the following economic data?
Y = $10 trillion C = $5 trillion TR = $2 trillion G = $2 trillion A) $2 trillion B) $3 trillion C) $5 trillion D) cannot be determined without information on taxes (T)