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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Paul has the utility function U(q1,q2 ) = q1q2. If Paul consumes q1 = 4 and q2 = 2 his Marginal Rate of Substitution is
A) -2. B) 1. C) -1. D) -1/2.
Under Section 2 of the Sherman Act,
a. firms cannot act in ways that increase prices b. contracts between parties are deemed binding c. firms cannot operate in perfectly competitive markets d. firms that earn short-run profits face penalties e. a firm cannot attempt to monopolize an industry
Why do people specialize?
A. Specialization occurs when people do not want to learn new tasks. B. Specialization usually increases productivity. C. Specialization decreases people's dependence on each other. D. Specialization allows people to do a variety of job tasks.
Critics of debt relief make all of the following arguments EXCEPT
A) it would be wasted money since the conditions that caused the debt would be likely to persist. B) debt relief can quickly fuel a new round of borrowing that simply restores debt to prior levels. C) debt relief will encourage other nations to borrow excessively with the hope that their debts may be forgiven in the future. D) the cost of debt relief to the most severely indebted countries is too large for the high income countries to afford.