Starting from Long-Run Equilibrium, a Large Decrease in Government Purchases

question 78

Multiple Choice

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; higher; potential
• B)recessionary; lower; lower
• C)expansionary; lower; potential
• D)recessionary; lower; potential

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Definitions:

Interim Reporting

A financial reporting method used by companies to provide financial statements over periods shorter than a fiscal year, often quarterly.

Financial Position

A snapshot of what a company owns and owes at a specific point in time, often presented in the form of a balance sheet.

Interim Income Tax Expense

The estimated taxes a company incurs during an interim period, before the end of its fiscal year.

Estimated Average

A statistical measure that represents an approximation of the central tendency of a set of figures.