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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Which of the following assets is the most liquid?
a. Money market mutual fund shares. b. Certificates of deposit. c. Dollars. d. Passbook savings deposits.
If supply increases, the equilibrium price will rise and the equilibrium quantity will fall
a. True b. False Indicate whether the statement is true or false
Which of the following has proved to be spectacularly false, at least recently?
a. as an expansion proceeds, people will hold no more cash b. as an expansion proceeds, banks will hold no more excess reserves c. the oversmplified money multiplier formula is predicated on two critical assumptions d. All of the above are false.
Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X, ceteris paribus.Table 1.3Production Possibilities for Brushes and CombsCombinationNumber of combsOpportunity Cost(Foregone brushes)Number of brushesOpportunity Cost (Foregone combs)J4 0NAK3 10 L2 17 M1 21 N0NA23 On the basis of Table 1.3, the law of increasing opportunity costs applies to
A. Both brushes and combs. B. Brushes but not combs. C. Combs but not brushes. D. Neither brushes nor combs.