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
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M1 is considered ___________ measure of money compared to M2.
A. a more legitimate B. a less legitimate C. just as legitimate a D. a more stable
Mortgages with variable interest rates: a. increase the risk of expected inflation to creditors. b. increase economic efficiency. c. are offered at interest rates that can be adjusted to changes in inflation over time. d. make borrowers worse off when inflation increases
e. shift the risk of unexpected inflation from the borrower to the lender.
Use the graph below to answer the next question.
Other things equal, an increase in the price of a complementary resource would cause a
A. move from b to a on D1. B. shift from D2 to D3. C. shift from D3 to D2. D. move from a to b on D1.
If desired investment exceeds actual investment, then
A. Inventories are less than the desired level. B. Cyclical unemployment exists. C. Inventories are accumulating beyond desired levels. D. A recessionary GDP gap will emerge.