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 natural rate of output is the amount of real GDP produced
A. when the economy is at the natural rate of aggregate demand. B. when the economy is at the natural rate of unemployment. C. when the economy is at the natural rate of investment. D. when there is no unemployment.
Other things being equal, how would the market for tablet computers be affected by a large increase in productivity in the tablet-computer industry?
A. A decrease in price and a leftward movement along the supply curve B. A decrease in price and a rightward movement along the demand curve C. A decrease in price and a rightward movement along the supply curve D. An increase in price and a rightward movement along the demand curve