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
You might also like to view...
In the simplest Keynesian model of the determination of income, interest rates are assumed
A) to be exogenous and to influence desired spending. B) to be endogenous and not to influence desired spending. C) to be endogenous and to influence desired spending. D) to be exogenous and not to influence spending.
Risk pooling:
A. reallocates the likelihood of catastrophes happening. B. reallocates the costs of catastrophes when they occur. C. diversifies the risk of catastrophes occurring. D. gathers individuals with similar risks and pools them together.
Many economists criticize monopolists because they
a. charge a price that equals marginal cost rather than a price that equals average cost. b. do not innovate. c. produce a large quantity of waste. d. produce less than the socially efficient level of output.
International trade is the major cause of rising income inequality in the United States
Indicate whether the statement is true or false