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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A graph can be used to illustrate the relationship between the price of compact discs and the quantity of compact discs demanded. If there is evidence that buyers' income also influences the demand for compact discs, then a movement along the curve can be caused by a change in the price of compact discs
a. True b. False Indicate whether the statement is true or false
A lower interest rate makes more investment projects feasible, meaning that
a. there is a direct relationship between the rate of interest and the quantity of investment spending b. there is an inverse relationship between the rate of interest and the quantity of investment spending c. there is no relationship between the rate of interest and the quantity of investment spending d. the demand curve for investment spending is horizontal e. the demand curve for investment spending is vertical
Stabilization policies can best be described as policies that
A. attempt to eliminate recession and/or inflation in the economy. B. use changes in government spending to promote an equitable income distribution. C. use changes in the money supply to lower income tax rates. D. eliminate poverty through the adoption of work incentives.
According to the above table, the equilibrium price of earbuds is
A. $16. B. $10. C. $12. D. $14.