What happens in the long run after an increase in government spending growth?
A. Inflation expectations adjust and the SRAS curve shifts backwards.
B. The AD curve remains permanently in its new position.
C. The LRAS curve shifts out to match the increase in AD.
D. The AD curve shifts back to its original position.
Ans: D. The AD curve shifts back to its original position.
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Standardization of derivative contracts
A) increases their liquidity. B) is the rule with respect to contracts whose underlying asset is a financial security, but not for contracts whose underlying asset is a commodity. C) is the rule with respect to contracts whose underlying asset is a commodity, but not for contracts whose underlying asset is a financial asset. D) has been proposed many times by financial analysts, but has not yet been carried out by the SEC.
A . If the government places a tax on land users, what will happen to the quantity of land supplied, if the supply of land is costless? What will happen to land rent? b. How will your answers to Part a . change if there are differential rents in the absence of the government tax?