Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD 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. D; B
C. A; B
D. B; C
Answer: B
You might also like to view...
If all inputs are increased by 5 percent and output increases by 8 percent, then the
A) firm experiences constant returns to scale. B) long-run average cost curve slopes downward. C) long-run average cost curve shifts downward. D) firm experiences diseconomies of scale.
According to Keynes's absolute income hypothesis, if Record Swap store manager Brenda Nielsen and pop singer Madonna were each given $1,000,
a. Madonna would likely spend less of the $1,000 on consumption than Brenda b. Madonna would likely spend more of the $1,000 on consumption than Brenda c. Madonna and Brenda would spend equal amounts of the $1,000 on consumption d. Madonna and Brenda would save equal amounts over their lifetimes e. Neither Madonna nor Brenda would save any of the $1,000
As the economy becomes more technologically sophisticated, the wage premium can be expected to
a. continue rising. b. continue falling. c. rise. d. fall.
Which of the following best describes labor force participation rates for men and women over the period 1960 to 2000?
A. Labor force participation rates for both men and women increased. B. Labor force participation rates for both men and women decreased. C. Labor force participation rates for men increased while labor force participation rates for women decreased. D. Labor force participation rates for men declined while labor force participation rates for women increased.