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
Economics
You might also like to view...
An example of an international policy externality is
A) the locomotive effect. B) the liquidity effect. C) the monetary effect. D) sterilization.
Economics
To decrease bank reserves, the Fed can
A) engage in an open market sale. B) reduce reserve requirements. C) lower the discount rate. D) set a lower interest rate for term deposits.
Economics