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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An increase in foreign incomes
A) increases aggregate demand in the United States. B) increases the aggregate quantity demanded in the United States. C) decreases the aggregate quantity demanded in the United States. D) decreases aggregate demand in the United States.
Using cross-sectional data from the two Housing Assistance Supply Experiment (HASE) sites—Brown County, Wisconsin, and St
Joseph County, Indiana—John Mulford of Rand Research estimates the long-run "permanent" income elasticity of housing expenditures to be 0.45 for owners. Using this information, what is likely to happen to housing expenditures if the government increases income transfers to recipients in HASE sites? A) Housing expenditures will decrease by a small amount. B) Housing expenditures will increase significantly. C) Housing expenditures in HASE sites will fall significantly as recipients move out of these areas to higher-income areas. D) Housing expenditures will increase, but not significantly.
As the costs associated with deposit outflows ________, the banks willingness to hold excess reserves will ________
A) decrease; increase B) increase; decrease C) increase; increase D) decrease; not be affected
The federal personal income tax is designed as a
a. progressive tax b. regressive tax c. proportional tax d. poll tax e. payroll tax