Refer to the accompanying figure.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. A; a recessionary
B. B; no output
C. B; expansionary
D. D; an expansionary


Answer: D

Economics

You might also like to view...

Which of the following is a definition of the consumption function?

a. A functional relationship between real consumption spending and real disposable income b. A functional relationship between real consumption spending and the interest rate c. A functional relationship between real consumption spending and wealth d. A functional relationship between real consumption spending and total spending e. A functional relationship between real consumption spending and net taxes

Economics

A rise in input prices of oil, which affects many or most firms across the economy, can cause the aggregate supply curve to______________.

a. shift b. incline c. decline d. flatten

Economics

To measure GDP using the expenditure approach you must collect data on

A) inflation. B) exports. C) wages. D) saving.

Economics

What is a term referring to a table that shows the quantity supplied at a range of different prices?

a. demand curve b. demand schedule c. supply curve d. supply schedule

Economics