Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential
B. expansionary; higher; potential
C. recessionary; lower; potential
D. recessionary; lower; lower
Answer: C
You might also like to view...
A system of barter has substantial transactions costs because
A) taxes under such a system are generally a large fraction of the value of output. B) traders must spend considerable time searching for trading partners. C) the uncertainties of trade result in high legal fees being incurred to draw up binding contracts. D) the uncertainties of trade result in high insurance premiums.
If marginal product rises, then marginal costs rise
Indicate whether the statement is true or false
If you gave your friend a gift of a corporate bond, such as a $100 General Motors bond, your friend would have a gift of
a. M1 money b. M2 and fiat money c. specie d. near money e. not money
Refer to Figure 1.8. If the university decides to lower grading standards, then
A. We will slide up the curve from point B to point C. B. The curve will begin to bend downward at an earlier point. C. This curve will shift to the left. D. This curve will shift rightward.