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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If a society moves from a period of time with significant unemployment to a time with full employment, its production possibilities frontier will
A) shift rightward. B) not shift because the society moves from a point inside the frontier to a point on the frontier. C) shift leftward. D) not shift because the society moves from one point on the frontier to a point inside the frontier. E) not shift because the society moves from one point on the frontier to a point outside the frontier.
Suppose a Chinese restaurant provides free tea to its customers. In the economic way of thinking, the restaurant is
A) engaging in predatory pricing of its meals. B) engaging in predatory pricing of tea. C) selling Chinese food below cost. D) doing all of the above. E) almost certainly doing none of the above.
A Rolling Stones song goes: "You can't always get what you want." This echoes an important theme from microeconomics. Which of the following statements is the best example of this theme?
A) Consumers must make the best purchasing decisions they can, given their limited incomes. B) Workers do not have as much leisure as they would like, given their wages and working conditions. C) Workers in planned economies, such as North Korea, do not have much choice over jobs. D) Firms in market economies have limited financial resources.
A point lying inside (under) a production possibilities curve indicates that
a. the economy is saving money. b. there are no associated opportunity costs. c. more output could be produced with existing resources. d. technology limits production.