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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Which of the following is true about inflation?
a. Inflation promotes social harmony by uniting people against the government. b. Inflation is more damaging if it is anticipated. c. Accurate anticipation of inflation is possible for everyone who is well informed about economic events. d. Those who lend money at a rate below the rate of inflation suffer economic losses. e. If people accurately anticipate inflation, their actions will prevent it.
The wealthy nations of the world have
a. the largest populations. b. more supplies of natural resources. c. more supplies of capital. d. larger labor forces.
A perfectly competitive firm that earns a normal profit in the long run actually earns zero economic profit
a. True b. False Indicate whether the statement is true or false
To reduce our dependence on foreign oil, policy makers must realize that the cross-price elasticity sign for gasoline and fossil fuel-burning cars is negative.
Answer the following statement true (T) or false (F)