Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary
B. B; no output
C. B; expansionary
D. A; a recessionary
Answer: A
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If the firm is producing in the long run, then the firm's average total cost curve:
A. equals the average variable cost curve. B. is less than the average variable cost curve. C. exceeds the average variable cost curve. D. equals zero.
Variable costs are:
A. costs that don't depend on the quantity of output produced. B. costs that depend on the quantity of output produced. C. one-time costs. D. None of these is true.
The impact of saving on the economy is
a. always beneficial b. always harmful c. beneficial in the short run, but not in the long run d. beneficial in the long run, but not necessarily in the short run e. neutral in both the short run and the long run
When a country is on the downward-sloping side of the Laffer curves, a cut in the tax rate will
a. decrease tax revenue and decrease the deadweight loss. b. decrease tax revenue and increase the deadweight loss. c. increase tax revenue and decrease the deadweight loss. d. increase tax revenue and increase the deadweight loss.