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

Economics

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Part B of the Medicare program covers _____ and is _____

a. pharmaceuticals; voluntary b. pharmaceuticals; mandatory c. physician costs; voluntary d. physician costs; mandatory

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In the classical model, an increasing demand for labor will

a. cause an expansion with higher employment and a higher real wage. b. cause a shortage of labor because the labor market always clears. c. cause a recession with lower employment and a lower real wage. d. cause a recession because wages are fixed in the short run. e. cause an expansion with lower employment and a higher real wage.

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A transaction cost associated with spot trading is:

a. travel to and from the market. b. shipping costs. c. brokerage commissions. d. the spread, which is earned mostly by large banks.

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For a monopolist, if total revenue increases as output increases, then marginal revenue is

A. zero. B. positive. C. negative. D. greater than the price.

Economics