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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The government of Poorland increased its expenditure following a recession. This is likely to lead to ________
A) higher interest rates B) an increases in demand for labor C) a decrease in the price level D) lower real wages
According to purchasing power parity, the relationship among the domestic price (P), the foreign price (P ), and the nominal exchange rate (e), can be written as
A) P = e - P . B) P = P - e. C) P = eP . D) P = e/P .
In the short run, specific taxes on a firm result in
a. price increases that may not persist in the long run. b. an increase in consumer surplus because the tax permits spending in additional government services. c. shortages of the good being taxed. d. an increase in producer surplus because of the rise in price.
The monetary base is the sum of
What will be an ideal response?