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

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Fractional reserve banking refers to a banking system in which

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Inferior goods are low quality goods that people prefer to buy less of

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

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Is it possible for a country to run a trade deficit and yet have the value of its currency not change? Use a supply and demand model of a foreign exchange market to explain how this could occur.

What will be an ideal response?

Economics