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
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The law of increasing additional cost is due to
A) scarcity. B) inefficient use of technology. C) the fact that resources are not perfectly adaptable for alternative uses. D) the fact that there are always alternatives and it is costly to figure out which alternative is best.
If the income line lies below the consumption curve, then whatever the level of national income, saving
a. equals consumption b. equals income c. is less than zero d. is equal to zero e. is greater than zero
(Consider This) From an economist's perspective, when is government too big?
A. Government is always too big. B. When government activity exceeds 10 percent of gross domestic product. C. When the marginal costs from additional government spending exceed marginal benefits. D. When the marginal benefits from additional government spending exceed marginal costs.
When income rises
A. quantity of a normal good demanded rises. B. demand for a normal good rises. C. demand for a luxury good falls. D. demand for an inferior good rises.