A fiscal stimulus works to close a recessionary gap by shifting the
A) AD curve leftward.
B) AS curve leftward.
C) AD curve leftward and AS curve leftward.
D) AD curve rightward.
E) potential GDP line leftward.
D
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Recent research estimates that the short-run price elasticity of demand for gasoline in the U.S. is -0.3, and the long-run price elasticity of demand is -1.4. What happens if the government increases the federal gasoline tax?
A . Consumer expenditures on gasoline decrease over the short run and long run. B. Consumer expenditures on gasoline increase over the short run and decline over the long run. C. Consumer expenditures on gasoline decline over the short run and increase over the long run. D. Consumer expenditures on gasoline increase over the short run and long run.
The peak in U.S. government spending as a percent of GDP occurred during
A) World War II. B) the 1960s war on poverty. C) the Great Depression. D) the war against Iraq in the 2000s.