Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary
B. B; no output
C. B; expansionary
D. A; a recessionary
Answer: A
You might also like to view...
Consumer surplus exists when a
A) person buys something with a marginal benefit less than what they paid. B) person buys something with a marginal benefit exactly what they paid. C) person buys something with a marginal benefit more than what they paid. D) producer sells something for more than it is worth. E) person buys something with a marginal cost less than what they paid.
The __________ "Hausbank" handles all the external financing for a firm
A) Japanese B) German C) Swedish D) British
The production possibilities curve shifts outward when
A) the law of increasing additional cost takes hold. B) the economy is producing efficiently. C) we produce more consumption goods over productive investment in equipment. D) there is an increase in resources or technology.
Since 1959 when the official data on the poverty rate began, the poverty rate was at its highest in
a. 1959. b. 1968. c. 1977. d. 1986.