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
You might also like to view...
A quota represents
A) A combination of ad valorem and specific tariffs. B) A quantitative restriction on the amount of good that may be imported. C) A compromise between taxpayers and consumers. D) None of the above.
A good salesperson can sell $100,000 worth of goods, while a poor one can sell only $10,000 worth of goods. Job applicants know if they are good or bad, but the firm does not
A firm will offer job applicants a choice between a fixed salary of $2,000 or a commission on the sale. Assume risk-neutral salespersons and no opportunistic behavior. Given that the firm wants to distinguish a prospective good salesperson from a poor one, what should be the commission on sales? A) Commission should be larger than 50%. B) Commission should be larger than 40%. C) Commission should be between 2% and 20%. D) Commission should be smaller than 2%.
When perfectly competitive firms in an industry are earning positive economic profits, a. we would expect entry into the industry
b. we would expect stability in the industry, since it is in long run equilibrium. c. we would expect exit from the industry. d. we do not know whether there would tend to be entry, exit, or stability in the industry.
If you worked 35 hours a week at a minimum wage job you could ________ a family of four above the poverty line.
A. easily keep B. barely keep C. not come close to keeping