Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output
B. D; an expansionary
C. B; recessionary
D. D; a recessionary
Answer: D
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There is a strong, positive correlation between educational attainment and lifetime earnings
a. True b. False Indicate whether the statement is true or false
The situation in which actual output exceeds potential output
a. is impossible because all resources are employed to produce potential output b. is possible only in times of high unemployment c. is possible only if the unemployment rate is negative d. is possible only in the long run e. creates pressure for inflation
By how much does the real, bilateral exchange rate change when the nominal, bilateral exchange rate changes from $1.40/£ to $1.60/£, the U.S. tradable basket from $2,100 to $2,200 and the British tradable basket from £1,500 to £1,600?
a. The real exchange rate rises by 12.5%. b. The real exchange rate rises by 16.35%. c. The real exchange rate rises by 3.1% d. The real exchange rate falls by 3.1% e. The real exchange rate falls by 12.5%
For each interest rate, the LM curve illustrates the level of output where
A) the goods market is in equilibrium. B) inventory investment equals zero. C) money supply equals money demand. D) all of the above E) none of the above