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
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In which industry(ies) are firms price takers?
a. oligopolies b. monopolies c. perfect competition d. oligopolies and monopolies e. monopolistic competition
Which of the following best describes the reason for studying economics?
a. Studying economics helps individuals, businesses, and governments make the best decisions. b. Studying economics helps individuals, businesses and governments understand the financial problems facing the world today. c. Studying economics gives businesses and governments the answers to economic problems. d. Studying economics only helps governments understand the major problems facing the world today.