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
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The price of a California orange is $2.00 and the price of a Florida orange is $1.00. If the price of California oranges goes down by one cent and the quantity demanded of Florida oranges goes up by one thousand, then
a. the cross elasticity is 0.4. b. these goods are substitutes. c. the price elasticity of demand for California oranges is 0.4. d. these goods are complements.
Refer to the information above. By accelerator theory, net investment will remain above zero in the long run only so long as
A) expected sales are greater than v* times the capital stock. B) replacement investment is above zero. C) expected sales keep rising. D) expected sales do not fall. E) actual sales fall below expected sales.
A rightward shift of a demand curve represents a decrease in demand
a. True b. False
A rightward shift in a demand curve and a leftward shift in a supply curve both result in a
A. Lower equilibrium quantity. B. Higher equilibrium quantity. C. Lower equilibrium price. D. Higher equilibrium price.