Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 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. B; C
C. B; A
D. D; B
Answer: D
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Based on Scenario 6.1 above, if a tariff of 20 percent is placed on imports of dining room tables, and another tariff of 50 percent is placed on imports of wood and parts, then the effective rate of protection on tables made in the United States is
A) 70 percent. B) 50 percent. C) 20 percent. D) 12.5 percent. E) 0 percent.
Given the expected rate of return on all possible investment opportunities in the economy:
A. an increase in the real rate of interest will reduce the level of investment. B. a decrease in the real rate of interest will reduce the level of investment. C. a change in the real interest rate will have no impact on the level of investment. D. an increase in the real interest rate will increase the level of investment.
In the short run, a firm that finds itself earning a loss should compare the market price to which cost in order to determine how to minimize its losses?
A. Average total costs B. Average variable costs C. Marginal costs D. Fixed costs
If an electric power plant does not bear the entire cost of the pollution it emits, it will
a. not emit any pollution so as to avoid the entire cost of the pollution. b. emit lower levels of pollution. c. emit an acceptable level of pollution. d. emit too much pollution.