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
You might also like to view...
The key interest rate in the Eurocurrency market is the
A) London interbank offer rate. B) Eurobank spread rate. C) Prime rate. D) C.D. rate.
Comparing proprietorships with partnerships, which is TRUE?
A) In both cases, profits are taxed only once. B) Partnerships outnumber proprietorships 2-to-1 in the United States. C) Proprietorships generally end with the death of the owner, but partnerships continue as long as at least one partner survives. D) A proprietor faces unlimited liability for her firm's debts, but in a partnership each partner is only responsible for an even share of the firm's indebtedness.
Proponents of a command economy argue that it promotes:
a. efficiency. b. equity. c. consumer sovereignty. d. economic growth.
The financial institutions play an important role in transferring the savings of the individuals to the investments by businesses. Which of the following correctly states this transfer?
A)banks collect the savings and lend the funds to the government who in turn redistribute it through different kinds of subsidies. B) Banks collect the savings and invest it in the stock market. C)Banks collect the savings, rewarding the savings by interest.and dividend payments and, lend the funds to businesses who in turn buy equipment, factories and capital goods. D) financial institutions do not have a major role in this process.