Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential
B. recessionary; higher; potential
C. recessionary; lower; lower
D. expansionary; higher; higher
Answer: A
Economics
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When a country experiences capital flight its interest rate
a. and net capital outflow rise. b. rises and net capital outflow falls. c. falls and net capital outflow rises. d. interest rate and net capital outflow fall.
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If the economy has an inflationary GDP gap, one possible solution is to increase taxes.
Answer the following statement true (T) or false (F)
Economics