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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In the late 1970s into the early 1980s, interest rates were high and very volatile. During this period:
A. money demand as well as velocity should have also been shifting and volatile. B. the Fed was actually targeting the short-term interest rate. C. the velocity of money should have been stable. D. it should have been easy for the Fed to predict the velocity of money.
Suppose the supply of Malaysian rubber increases. If U.S. producers purchase this rubber as an input, in the United States, this would cause a
A) rightward shift of the AD curve. B) leftward shift of the AD curve. C) rightward shift of the SRAS curve. D) leftward shift of the SRAS curve.
Which of the following examples would most likely have the highest economic well- being?
a. a country with $30,000 per capita and a 50 hour work week b. a country with $25,000 per capita and a 40 hour work week c. a country with $40,000 per capita and a 45 hour work week d. a country with $40,000 per capita and a 35 hour work week
Without targeting the deficit, the following is likely to occur after a ________ shock: Y? ? T? ? deficit?.
A. positive aggregate demand B. negative aggregate demand C. positive aggregate supply D. negative aggregate supply