Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher
B. expansionary; higher; potential
C. recessionary; higher; potential
D. recessionary; lower; lower
Answer: B
Economics
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The magnitude of the slope of the budget line is determined by
A) the marginal rate of substitution. B) the level of income. C) the consumer's preferences for the goods. D) relative prices.
Economics
Given a linear demand function of the form QXd = 500 - 2PX - 3PY + 0.01M, find the inverse linear demand function assuming M = 20,000 and PY = 10.
A. PX = 500 - 2QX - 3PY + 0.01M. B. PX = 335 - 0.5QX. C. PX = 500 - 2QX. D. PX = 335 - 2QX.
Economics