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

What is the meaning of "animal spirits"? How do these relate to planned investment spending and to unplanned investment spending?

What will be an ideal response?

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Economics

If Jen takes out a $2,000 loan for one year at 10 percent interest annually, the price she will pay for borrowing is:

A. $2,000. B. $2,200. C. $200. D. $2,400.

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Economics

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.