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; higher; potential
C. recessionary; lower; lower
D. expansionary; lower; potential
Answer: A
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Fogel (1964) showed that railroad construction after the Civil War dominated the markets for which of the following?
(a) Steel (b) Coal (c) Wood (d) None of the above
Referring to Figure 18.2, the peso is likely to depreciate if the exchange rate is either ________ or ________ pesos to the dollar.
A. 10; 11 B. 11; 12 C. 12; 13 D. 13; 14
Why is the principal-agent problem less likely when getting a haircut than when getting a car repaired?
a. Haircuts are less expensive than car repairs. b. There are no hidden actions when getting your hair cut. c. There are no hidden actions when getting your car repaired. d. Auto mechanics are less honest than hair stylists. e. There is no principal-agent relationship in car repair.
In the early 1990s, economists became alarmed over the national debt because it
a. was larger than three months' GDP. b. was growing faster than GDP. c. had reached twice the size of GDP. d. was growing faster than private debt.