Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output
B. D; an expansionary
C. B; recessionary
D. D; a recessionary
Answer: D
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The U.S. dollar is one of the leading reserve currency in the world. This means that
A) dollars are often used to settle international debts and to state other currency exchange values. B) dollars are the most common currency for savings internationally. C) dollars are held to cover shortfalls in government budgets. D) dollars are accepted in just about every country in the world.
In the Cournot model, the output that a firm chooses to produce increases as
A) the total output of other firms increases. B) the number of firms in the market increases. C) the number of firms in the market decreases. D) its marginal cost increases.
The percentage of the burden of an excise tax that is borne by sellers generally depends on the
a. size of the tax. b. relationship between the elasticity of demand and the elasticity of supply. c. elasticity of demand. d. elasticity of supply.
A supply shock is a surprise occurrence that
a. shifts the long-run aggregate supply curve to the right. b. either increases or decreases short-run aggregate supply and output. c. temporarily increases aggregate demand. d. temporarily reduces aggregate demand.