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
You might also like to view...
Refer to Figure 26-5. In the figure above, the movement from point A to point B in the money market would be caused by
A) an open market sale of Treasury securities by the Federal Reserve. B) an increase in the price level. C) a decrease in real GDP. D) an increase in the required reserve ratio by the Federal Reserve.
Which of the following is correct?
A. There is no firm mathematical relationship between marginal utility and total utility. B. Total utility is equal to the change in marginal utility from consuming an additional unit of a product. C. If marginal utility is diminishing and is a positive amount, total utility will increase. D. If marginal utility is diminishing, total utility must also be diminishing.