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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If autonomous investment increases by $200 billion and the marginal propensity to consume (MPC) is 0.5, then
A) real Gross Domestic Product (GDP) will rise by $100 billion. B) real Gross Domestic Product (GDP) will rise by $200 billion. C) real Gross Domestic Product (GDP) will rise by $400 billion. D) real Gross Domestic Product (GDP) will decrease by $100 billion.
A choice made by comparing all relevant alternatives systematically and incrementally is
A) an opportunity cost. B) a choice on the margin. C) a benefit. D) a sunk cost. E) a choice made in the social interest.
One reason education expenditures are increasing is that a larger percentage of resources are now being used on _____ expenditures
a. teacher aide b. non-classroom c. teacher salary d. textbook
A firm operating in a monopolistically competitive market can earn economic profits in
a. the short run but not in the long run. b. the long run but not in the short run. c. both the short run and the long run. d. neither the short run nor the long run.