Advocates of activist policy making point to the swift response of the Fed after September 11, 2001, as an example of effective policy making

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

If the graph shown is displaying a competitive market and the market is currently offering a wage less than P*:

A. firms will have a hard time finding employees. B. there would be excess workers who want to work at that wage. C. there would be unemployment in the market. D. firms would be forced by government to adjust their wages back to equilibrium.