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

Economics

What is a budget deficit? What is a budget surplus? Since 1970, has the U.S. government run more budget deficits or budget surpluses?

What will be an ideal response?

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Economics

Long-run economic growth is:

What will be an ideal response?

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Economics

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.