"The problem with socialism is that you eventually run out of other peopleÕs money.". This statement is by
a. Obama
b. Margaret Thatcher
c. George Bush
d. Mao
e. Deng
B
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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
In general, a formula that a central bank uses to set interest rates in response to changing economic conditions is called a
A) rate-of-return equation. B) Taylor rule. C) central bank reaction function. D) market adaptation identity.
Suppose the market demand function for ice cream is Qd = 10 - 2P and the market supply function for ice cream is Qs = 4P - 2, both measured in millions of gallons of ice cream per year. Suppose the government imposes a $0.50 tax on each gallon of ice cream. The aggregate surplus with the tax is:
A. $7.11 million. B. $3.56 million. C. $13.50 million. D. $10.67 million.
Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy, then:
A. borrowers are hurt, but lenders benefit. B. both lenders and borrowers benefit. C. both lenders and borrowers are hurt. D. lenders are hurt, but borrowers benefit.