Author Question: All of the following are likely to be effective at eliminating a recessionary gap except one. Which ... (Read 29 times)

genevieve1028 · **on:** Jun 30, 2018

All of the following are likely to be effective at eliminating a recessionary gap except one. Which is the exception?
a. Reducing Social Security payments to beneficiaries
b. Reducing personal income taxes
c. Increasing government expenditures on the interstate highway network
d. Increasing farm subsidies
e. Reducing corporate income taxes

Question 2

Distinguish the short run from the long run. Generally, what causes costs of production to vary with output in the short run? What generally causes costs of production to vary in the long run?

memslove · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

a

Answer to Question 2

The short run is any amount of time in which at least one resource is fixed. In the short run there are some fixed costs. In the long run, nothing is fixed. There are no fixed costs in the long run. Costs of production vary with output in the short run because of increasing and diminishing returns. Costs of production vary with output in the long run because of economies and diseconomies of scale.