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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Figure 4.3 illustrates the demand for tacos. If people expect the price of tacos to decrease in the near future, this would most likely bring about a movement from
A) point a to point b. B) point c to point a. C) D2 to D0. D) D0 to D1.
Economists who support market-based reforms for health care believe that increased competition among providers of health care would
A) increase costs but increase economic efficiency. B) increase costs and decrease economic efficiency. C) decrease costs and increase economic efficiency. D) decrease costs but decrease economic efficiency.
Bob invests $25 in an investment that has a 50% chance of being worth $100 and a 50% chance of being worth $0. From this information we can conclude that Bob is
A) risk loving. B) risk neutral. C) risk averse. D) Any one of the three above.
Which term refers to a situation in which a retailer agrees to sell only products from one manufacturer?
a. Exclusive dealing b. Natural monopoly c. Bundling d. Tying sales