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
You might also like to view...
Unlike an owner, a manager may be more concerned with _____ than with _____. Which pair of words best completes this sentence?
a. profits, personal benefits b. personal benefits, profits c. profits, working conditions d. cost, revenue
Which of the following would result from a tariff?
a. An increase in government budget deficit b. An increase in domestic production c. A greater volume of international trade d. Increased domestic consumption e. Decrease in prices of the imported goods
If a firm's average cost is currently $100, and the marginal cost is $95, then the average cost is currently falling
a. True b. False Indicate whether the statement is true or false
In the Santa Rita silver mines in Arizona in 1870, Mexican miners received about $12 per month while "American" miners received $70 . Although the wages of both groups tended to rise over time, the gap persisted until at least 1910 . Mexican and American miners did the same work and were equally productive. Economists call this pay differential
a. prejudicial differentials. b. compensating differentials. c. economic discrimination. d. Lorenz discrimination.