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; lower; potential
C. expansionary; higher; potential
D. recessionary; lower; lower
Answer: A
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Huge increases in government spending and record low levels of unemployment during the Vietnam War era in the late 1960s led policy makers to fear that
A) the economy was slipping into a recession, which would increase unemployment. B) the economy was growing too fast, which would increase unemployment. C) the economy was slipping into a recession, which would increase inflation. D) the economy was growing too fast, which would increase inflation.
According to the classical economists, an increase in unemployment
A. could not occur. B. would be made worse by a decrease in interest rates. C. would be reduced by an increase in interest rates, wages, and prices. D. would be reduced by a decrease in interest rates, wages, and prices.
Assume you pay a tax of $4000 on a taxable income of $24,000. If your taxable income were $30,000, your tax payment would be $5000. This tax structure is:
A. discriminatory. B. regressive. C. proportional. D. progressive.
Which of the following is a type of command-and-control regulation?
A. A law requiring consumers of electronics to pay a tax according to the amount of toxic heavy metals in each item purchased B. A law setting the maximum allowable amount of sulfur dioxide (SO2) in a certain district, and auctioning off permits totaling the allowable tons of SO2 C. A law requiring coke ovens to be built in a certain way so as to restrict the amount of pollution they emit D. A law taxing users of fuels according to the carbon content in the fuel