Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
You might also like to view...
Easy entry and exit ensure that perfectly competitive firms cannot make a long-run economic profit
Indicate whether the statement is true or false
The Coase theorem is significant because it
A. implies that no transaction costs are associated with solving externalities. B. shows that property rights can be assigned. C. shows that under certain conditions externalities can be corrected in the market without resorting to nonmarket means. D. a and b
The rational expectations hypothesis suggests that if wages and prices are flexible,
A) unanticipated monetary policy actions can shift the long-run aggregate supply curve but cannot shift the aggregate demand curve. B) anticipated monetary policy actions can affect nominal variables, but not real variables. C) unanticipated monetary policy actions can affect real variables, but not nominal variables. D) growth in the money supply can alter real variables only if the growth is anticipated.
Price decreases always increase economic efficiency.
Answer the following statement true (T) or false (F)