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...
The table above gives a nation's investment demand and saving supply schedules. It also has the government's net taxes and expenditures. The government has a budget
A) surplus of $60 billion. B) deficit of $20 billion. C) surplus of $20 billion. D) deficit of $60 billion. E) surplus of $40 billion.
Each of the following had a theory of profit except
A. Karl Marx. B. Joseph Schumpeter. C. Frank Knight. D. Pierre-Joseph Proudhon.
In the long run, a monopolistically competitive firm that is incurring a loss will ________ if total revenue is less than variable costs.
A. increase its output B. decrease its output C. shut down D. continue to produce its current output
The primary goal of expansionary monetary policy is to:
A. decrease the interest rate B. increase the interest rate C. decrease the money supply D. increase government purchase