Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher
B. expansionary; higher; potential
C. recessionary; higher; potential
D. recessionary; lower; lower
Answer: B
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Answer the following statement(s) true (T) or false (F)
1. All baskets of labor and capital capable of producing a given level of output are technologically efficient. 2. The Marginal Rate of Technical Substitution can be expressed as the ratio of the Marginal Productivities of Labor and Capital. 3. Output is held fixed along an isocost. 4. Moving down and to the right on an isoquant tells us how much quantity increases as inputs increase. 5. Like a family, a firm faces a fixed level of expenditure and therefore must choose one point along a particular isocost line.
If international trade is restricted by the government:
a. domestic consumers are benefited. b. domestic producers are adversely affected. c. consumers in the importing country are required to pay higher prices for the goods. d. consumers can access to better quality product at lower prices. e. the resources are allocated to their highest paid uses.
Both Diana and Sarah like jazz music and music by the Beatles. Diana likes music by the Beatles much better than jazz music, whereas Sarah prefers jazz music to music by the Beatles. If we were to graph an indifference curve with CDs by the Beatles on the horizontal axis and jazz CDs on the vertical axis, then
a. Diana and Sarah would have identical indifference curves. b. Diana's indifference curve would be steeper than Sarah's indifference curve. c. Sarah's indifference curve would be steeper than Diana's indifference curve. d. We do not have enough information to compare their indifference curves.
Suppose that the nominal exchange rate is 80 yen per dollar, that the price of a basket of goods in the U.S. is $500 and the price of a basket of goods in Japan is 50,000 yen. Suppose that these values change to 100 yen per dollar, $600, and 70,000 yen. Then the real exchange rate would
a. appreciate which by itself would make U.S. net exports fall. b. appreciate which by itself would make U.S. net exports rise. c. depreciate which by itself would make U.S. net exports fall. d. depreciate which by itself would make U.S. net exports rise.