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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Even though participants in the economy are motivated by self-interest, the "invisible hand" of the marketplace guides this self-interest into promoting general economic well-being
a. True b. False Indicate whether the statement is true or false
If the dollar appreciates relative to foreign currencies, we would expect:
A. the multiplier to decrease. B. a country's exports and imports to both fall. C. a country's net exports to rise. D. a country's net exports to fall.
What happens to equilibrium price when simultaneously demand increases and supply decreases?
A. Equilibrium price will increase. B. Equilibrium price will decrease. C. Equilibrium price will remain the same. D. Equilibrium price may increase, decrease, or remain the same depending on the magnitude of the shifts in demand and supply.
Assume a firm is currently producing 100 units of output, total fixed costs are $10,000, and average variable costs are $8. Based on this information we can conclude, with certainty, that the firm's:
A) marginal costs are $8. B) total variable costs are $8000. C) average fixed costs are $2. D) total costs are $10,800.