Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary
B. B; no output
C. B; expansionary
D. A; a recessionary
Answer: A
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According to the ________, as long as property rights are clearly defined, two agents can always bargain to reach the efficient outcome
A) Coase theorem B) Ricardian theory on rent C) revenue-equivalence theorem D) envelope theorem
Refer to Figure 17-2. Suppose the economy is at point B in the figure above. Which of the following is true?
A) The economy is producing at potential GDP. B) The current unemployment rate is 5%. C) Expected inflation and actual inflation are the same. D) The expected rate of inflation is 3%. E) The natural rate of unemployment is 3.8%.
If the demand for the finished product increases, the:
a. demand for the resources will increase. b. demand for the resources will decrease. c. marginal factor cost will increase. d. marginal factor cost will decrease. e. MP will increase.
The personal income tax is the single largest source of revenue for the federal government
a. True b. False Indicate whether the statement is true or false