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

You might also like to view...

The calculation of GDP excludes the value of

A) government expenditure on office supplies. B) households' purchases of shampoo. C) businesses' purchase of new machine tools. D) a family member painting the family home. E) expenditure on durable goods.

Economics

What are the three factors that affect the demand for foreign currency?

What will be an ideal response?

Economics

The father of general equilibrium theory is considered to be:

A. Kenneth Arrow. B. Gerard Debreu. C. Leon Walras. D. John Nash.

Economics

The demand curve of the monopoly firm is always the

a. average revenue curve. b. marginal revenue curve. c. total revenue curve. d. marginal cost curve above average variable cost.

Economics