Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.

A. B; no output
B. D; an expansionary
C. B; recessionary
D. D; a recessionary


Answer: D

Economics

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Which of the following is a normative statement?

a. Fifteen percent of Americans go without health insurance in a year. b. The Consumer Price Index rose three-tenths of one percent in May. c. An increase in the minimum wage will increase teenage unemployment. d. Americans would be better served by single-payer health care system. e. The French trade deficit reached an all-time high last year.

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The law of diminishing marginal utility explains why

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Public choice theory indicates that the behavior of people in government

a. differs from the behavior of people in the private sector because they are motivated by the public interest rather than their own personal self-interest. b. differs from the behavior of people in the private sector because public sector decision roles do not allow people to pursue their own self-interests. c. is the same as people in the private sector only if decisions are made by majority vote. d. is best understood by applying the same principles we use to predict the behavior of people in the private sector.

Economics

The loss-minimizing output for the perfectly competitive firm occurs at the point at which

A. TC - ATC = maximum. B. TR - MR = minimum. C. TR - TC = maximum. D. MR = MC.

Economics