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
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In the above figure, the long-run equilibrium real GDP is
A) $10 trillion. B) $11 trillion. C) $12.trillion D) not displayed.
Which of the following is an example of a fixed input?
a. The acreage of a farmer's land. b. Machinery. c. The size of a firm's plant. d. All of these.
The fact that there is a market for federal funds enables banks to:
A. hold a lower level of excess reserves than they would otherwise hold. B. hold less in required reserves. C. borrow more from the Fed. D. make fewer loans than they would otherwise.
When marginal revenue is positive,
A. marginal revenue is greater than price. B. demand is elastic. C. decreasing price will decrease total revenue. D. both b and c E. all of the above