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

question 82

Multiple Choice

Starting from long-run equilibrium,a large increase 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) expansionary;lower;potential
• C) expansionary;higher;higher
• D) recessionary;higher;potential
• E) recessionary;lower;lower

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Definitions:

Pure Monopoly

A market structure where a single company is the sole producer for a particular good or service, facing no competition.

Barriers to Entry

Factors that make it difficult for new firms to enter a market, such as high startup costs, regulatory requirements, and established competitors.

Market Power

The ability of a firm to influence or control the price and quantity of goods or services in a market.

Marginal Revenue

The additional income obtained from selling one more unit of a product or service.