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
You might also like to view...
Which part of the Federal Reserve System holds reserves of the member banks?
A. The Federal Advisory Committee B. The Federal Open Market Committee C. The Board of Governors D. The 12 Federal Reserve Banks
Income effect of lower wages implies
a. workers prefer leisure to work. b. an increase in the productivity of labor. c. a fall in the demand for labor. d. workers would want to work more.
A country's aggregate production function refers to the value of what is produced per worker or per hour worked
a. True b. False Indicate whether the statement is true or false
The Phillips curve shows the relationship between unemployment and inflation
a. True b. False Indicate whether the statement is true or false