Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential
B. expansionary; higher; potential
C. recessionary; lower; potential
D. recessionary; lower; lower
Answer: C
You might also like to view...
The number of compact discs purchased by a consumer depends on the price of the discs as well as the prices of all other goods purchased.
Answer the following statement true (T) or false (F)
Figure 13-2 above illustrates an economy with an unstable commodity demand and two possible Fed policies, a constant real money supply or a constant interest. Which policy target promotes a stable economy best?
A) constant money supply, A0 to A1 B) constant money supply, B0 to B1 C) constant interest rate, A0 to A1 D) constant interest rate, B0 to B1
If total deposits at Resolute Bank and Trust are $100 million, total loans are $70 million, and excess reserves are $20 million, then which of the following is the required reserve ratio?
a. 10 percent b. 20 percent c. 30 percent d. 70 percent
How are economic theories like a road map?
a. They both ignore irrelevant details. b. They both are constantly used by economists. c. They both refer to important geographic locations. d. They both reflect the world precisely.