Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher
B. expansionary; higher; potential
C. recessionary; higher; potential
D. recessionary; lower; lower
Answer: B
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Suppose that a consumer regards two types of soap as perfect substitutes for one another. The price consumption path generated by changing the price of one type of soap
A) is always upward sloping. B) is always horizontal. C) is always vertical. D) corresponds with the axis for the cheaper soap. E) corresponds with the axis for the more expensive soap.
Market demand is
A) the total quantities demanded of all consumers of a particular item at given prices. B) a movement along the demand curve in response to the market. C) total equilibrium demand for the market. D) the demand for and supply of a good or service.
What is the best response of firm A, given firm B is charging a High Price?
a. Charge a low price b. Charge a high price c. Charge zero, give the good away d. All of the above
A sales tax is an example of an excise tax
Indicate whether the statement is true or false