Starting from a long-run equilibrium, a reduction in potential output leads to ________ gap in the short run and to a ________ rate of inflation in the long run.
A. a recessionary; higher
B. an expansionary; higher
C. an expansionary; lower
D. a recessionary; lower
Answer: B
You might also like to view...
Suppose the price of water rose sharply. Other things constant, what is the least likely to occur?
A) People will consume less water. B) Fewer swimming pools will be filled with water. C) More high-pressure showerheads will be sold. D) The demand for water will fall.
For lock-in to be an effective competitive strategy, a firm must successfully raid the customer base of competing firms on a regular basis
Indicate whether the statement is true or false
If a person can make $70,000 as an accountant, $60,000 as a chef, $20,000 as a mechanic, and nothing as an opera singer, he or she has a comparative advantage in
A) accounting. B) being a chef. C) being a mechanic. D) opera singing.
Which of the following are implicit costs for a typical firm?
a. insurance costs b. electricity costs c. opportunity costs of capital owned and used by the firm d. cost of labor hired by the firm e. the cost of raw materials