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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Moving along a short-run Phillips curve, a reduction in the unemployment rate is achieved by
A) reducing the size of the labor force. B) shifting the aggregate supply curve leftward. C) increasing potential GDP. D) running a federal budget deficit. E) increasing the inflation rate.
What is a private cost of production? What is a social cost of production? When is the private cost of production equal to the social cost of production?
What will be an ideal response?
Which of the following is the best example of tacit collusion?
A) The formation of a cartel. B) Price leadership. C) Predatory pricing. D) Noncooperative pricing behavior.
In an open economy, a society's consumption possibilities are typically ________ its production possibilities.
A. less than B. unrelated to C. equal to D. greater than