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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Refer to Figure 15-15. Why won't regulators require that Erickson Power produce the economically efficient output level?
A) because at the economically efficient output level, the marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit B) because Erickson Power will earn zero profit C) because there is insufficient demand at that output level D) because Erickson Power will sustain persistent losses and will not continue in business in the long run
Wealth is considered to be a
A) nontaxable stream of funds. B) flow. C) stock. D) resource.
Outsourcing is being practiced by
A) U.S. firms that want to keep jobs at home in the United States. B) overseas firms hiring in the U.S. labor market and by U.S. firms hiring in foreign labor markets with lower wages. C) U.S. firms only. D) governments but private firms are not allowed to outsource work.
Define opportunity cost