Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential
B. recessionary; higher; potential
C. recessionary; lower; lower
D. expansionary; higher; higher
Answer: A
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In the midst of the Great Depression, President Roosevelt in a radio address to the nation encouraged everyone to "spend ourselves into prosperity." His advice reflected
A) Say's Law. B) the expenditure multiplier effect. C) his view that there should be no saving and no dissaving. D) his view that induced expenditure was less important than autonomous expenditure. E) the difference between actual aggregate expenditure and planned aggregate expenditure.
Which of the following describe the United States' unemployment rate over the last 80 years?
i. The unemployment rate has decreased each year since the Great Depression. ii. The unemployment rate has averaged about 5.7 percent since 1929. iii. Job creation due to defense spending and consumer spending in the 1960s drove the unemployment rate to one of its lowest level. A) i and ii only B) ii and iii only C) i, ii and iii D) i only E) i and iii
________ bubble is driven entirely by unrealistic optimistic expectations
A) An irrational exuberance B) A credit-driven C) A stock D) A debt-driven
Refer to the above figure. Profits for this firm are
A) negative. B) zero. C) positive. D) undetermined without more information.