Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
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The unemployment rate is defined as the
A) number of people not working. B) percentage of the population not working. C) percentage of the labor force not working. D) percentage of the working-age population not working.
During a recession, would classical economists propose that changes in government spending or taxes be used to improve economic conditions? Briefly explain
What will be an ideal response?
In the Friedman-Lucas money surprise model
A) If actual inflation is higher than anticipated inflation, then output must be above its trend value. B) If actual inflation is higher than anticipated inflation, then output must be below its trend value. C) money is neutral. D) monetary policy does not work.
If the CPI in year 2 equals 110 and the CPI in year 3 equals 121, it can be concluded that consumer prices:
A. rose from year 2 to year 3 by 21 percent. B. rose from year 2 to year 3 by 10 percent. C. are the same in year 2 as in the base year. D. rose from year 2 to year 3 by 11 percent.