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...
Which of the following would be inconsistent with the notion of a competitive market process and the notion of perfect competition?
A) Price searching behavior B) Predatory pricing C) Advertising D) Licenses and other legal restrictions on entry E) Hostile takeovers
Economics
In the short run, we assume that the number of firms in a perfectly competitive market:
A. varies if perfect information is present. B. varies more than the long-run equilibrium. C. is fixed. D. is equal to the number of firms in the long-run.
Economics