Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C
B. D; B
C. A; B
D. B; C
Answer: B
You might also like to view...
When money prices are used to facilitate comparisons of value, money is said to function as a
A) unit of account. B) medium of exchange. C) store of value. D) payments-system ruler.
The demand curve facing a firm shows the
a. maximum price the firm can charge and still sell any given amount of output b. minimum price the firm can charge and still sell any given amount of output c. minimum price at which the firm will demand any given quantity of output d. maximum price at which the firm will demand any given quantity of output e. minimum quantity of output the firm can sell at any given price
If the government increases defense spending by $1 billion and the MPC is 0.8, how much additional spending will occur in the third “round” of spending?
A. $640 million B. $800 million C. $1 billion D. $1.8 billion
There is an opportunity cost associated with
A. only investments made with funds received from the sale of new bonds. B. only investments made with retained earnings. C. only investments made with borrowed funds. D. every investment project, no matter how it is funded.