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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Answer the following statement true (T) or false (F)
If Zach's saving function is of the form [S = -300 + 0.2Y], his consumption equals his income at an income level of
A. 300. B. 600. C. 1,040. D. 1,500.
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