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...
Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a result,
A) the economy will move down along the long-run aggregate supply curve. B) the economy will move up along the long-run aggregate supply curve. C) the long-run aggregate supply curve will shift to the right. D) the long-run aggregate supply curve will shift to the left.
Which of the following is a stock variable?
a. Saving b. Consumption c. Income d. Investment e. Money
Suppose the accompanying table describes the demand for a good produced by monopolist.PriceQuantity$101$92$83$74$65$56$47The monopolist's marginal revenue from selling the 4th unit of output is less than $7 because:
A. marginal cost is greater than $3. B. demand is perfectly elastic. C. the consumer only pays $4 for the 4th unit. D. it has to charge $1 less for each of the first 3 units of output.
The unemployment rate is 10 per cent. The rate of job separation is 5 per cent. How high does the rate of job finding have to be to keep the unemployment rate constant?
A. 10 per cent B. 45 per cent C. 50 per cent D. 90 per cent