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...
Refer to above Table 2-1. What is the level of Personal Saving?
A) 100 B) 90 C) 80 D) 130
What problem is addressed by a government safety net for the banking system? What problem is caused by the safety net?
What will be an ideal response?
The implication of the prisoners' dilemma for a long-run strategy is for firms to
a. Do nothing b. Differentiate your product that competitors cannot imitate c. Figure a way to lower their costs d. Both b and c
Financial disintermediation occurs when:
a. Individuals no longer trade securities in the secondary market. b. Individuals withdraw funds from financial intermediaries and invest them elsewhere. c. Businesses no longer borrow directly in the bond market. d. All of the above.