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
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Luigi is willing to lend Klaus $5,000 for one year at a nominal rate of interest of 7%. Both Luigi and Klaus expect the rate of inflation to be 2% in the next year. What is the real return that Klaus is offering to Luigi?
A. 9% B. 5% C. 7% D. 2%
The primary tool used to change the US money supply and interest rates is open market operations
a. true b. false
Holding all else constant, a decrease in U.S. real GDP will ________ the supply for dollars in the foreign exchange market and ________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. increase; decrease B. decrease; decrease C. decrease; increase D. increase; increase
Inheritance is responsible for about ________ percent of the income inequality in the United States
A) 10 B) 1 C) 67 D) 95