Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 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. B; C
C. B; A
D. D; B
Answer: D
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What will be the principal and most immediate effect on the supply or demand of raw cotton grown in the United States if a low-cost process for making cotton cloth wrinkle-free is developed?
A) Decrease in demand B) Decrease in supply C) Increase in demand D) Increase in supply
Domestic currency depreciation will:
A) help domestic firms that export and hurt domestic firms that import. B) help domestic firms that import. C) hurt domestic firms that export and help domestic firms that import. D) hurt domestic firms that export.
Deflation is a:
A. sustained fall in the aggregate price level. B. sustained increase in the aggregate price level. C. steady, unchanging aggregate price level. D. steady fall in the exchange rate.
Diseconomies of scale refers to when in the long run:
A. average total cost does not depend on the quantity of output. B. an increase in the quantity of output increases average total cost. C. an increase in the quantity of output decreases average total cost. D. None of these is true.