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 graph shown, if the market is in equilibrium, total surplus is area(s):
A. A.
B. A + B + C.
C. A + B + C + D + E.
D. D + E.
Which of the following is most likely to increase U.S. exports?
a. The government gives subsidies to U.S. firms that export goods or services. b. The government reduces the size of the budget surplus. c. The United States unilaterally reduces its restrictions on foreign imports. d. Taxes on domestic saving rise.
CARFAX is a company that compiles and sells histories of used cars. Used car dealers offer to give their customers a copy of the CARFAX history of the cars in their inventory to:
A. give buyers additional information about used cars for sale. B. give sellers additional information about used cars for sale. C. cause adverse selection. D. avoid having to offer warranties.
Cheating in a cartel is more likely to occur if the industry
A. has little ability to affect market prices. B. has a large number of firms. C. has easily observable prices. D. has homogeneous products.