Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential
B. expansionary; lower; potential
C. expansionary; higher; potential
D. recessionary; lower; lower
Answer: A
You might also like to view...
Compared to IACs, LDCs are often characterized by:
a. lower adult literacy. b. lower per capita energy consumption. c. lower life expectancy. d. All of the answers are correct.
The worst recession since World War II started in which year?
A. 1957 B. 1973 C. 1981 D. 2007
Laissez-faire economists believe:
A. government policies are largely ineffective in coordinating economic activity. B. government intervention in the market is necessary for a smoothly operating economy. C. most government policies would probably make things worse. D. government can implement policy proposals that have mostly positive impacts on the economy.
A firm will ________ in the short run if variable costs exceed revenues.
A. break even B. shut down C. produce at a loss D. earn a profit