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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"The Federal Open Market Committee (FOMC) is the group within the Federal Reserve that makes monetary policy decisions. The FOMC meets twice a year and each meeting lasts eight days." Are these two statements correct or incorrect? Why?
What will be an ideal response?
A temporary decrease in government purchases would ________ the domestic real interest rate and ________ net desired saving (desired saving less desired investment) in the economy
A) lower; increase B) lower; decrease C) raise; increase D) raise; decrease
Which one of the following will not cause the production possibilities curve to shift outward?
a. improvements in the stock of land b. increased educational opportunities c. a very low birth rate d. increased entrepreneurial activity
Producer surplus is the
A. area under the supply curve to the left of the amount sold B. area under the supply curve to the right of the amount sold C. amount the seller is paid plus the cost of production D. amount the seller is paid less the cost of production E. cost to sellers of participating in a market