Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential
B. expansionary; lower; potential
C. expansionary; higher; potential
D. recessionary; lower; lower
Answer: A
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The transformation in labor has dramatically impacted the distribution of income in the U.S
Indicate whether the statement is true or false
A positive supply shock causes a leftward shift in the SRAS curve
a. True b. False Indicate whether the statement is true or false
The desire for goods and services is
a. created by a market economy b. the ultimate explanation for all production c. why it is so difficult to explain how our economy works d. the cause of inflation e. what causes the market wage for labor to continually increase
One reason why critics argue that large firms should not be broken up is that in some cases
a. large firms have a concentration of economic power. b. large firms are less-efficient producers. c. many smaller firms would be less-efficient producers. d. there is no economic reason to break up large firms that may have some control over the market.