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

Economics

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A firm is deciding whether or not to close down its plant and modernize by installing new technology. Which of the following should management ignore when making the decision?

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