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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Which of the following is always a characteristic of the oligopoly market structure? a. Many sellers, each small in size relative to the overall market. b. Few sellers
c. All sellers produce identical products. d. Easy, low-cost entry and exit.
Annie's Breakfast Corner charges $5.00 per meal. Annie's costs for servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies, and business license average out to $1.25 per meal. Since the market is highly competitive, Annie should: a. raise her prices above the level set by the market
b. keep the business open in the short run but plan to close the business in the long run. c. keep the business open in the short run and plan to expand the business in the long run. d. lay off her staff, break her lease, and close the business immediately.
If a local government eliminates the tax exemption on municipal bonds, we'd expect to see:
A. municipal bonds will become more attractive to investors. B. an increase in the yield on taxable bonds. C. a decrease in the gap in yields on taxable and tax-exempt bonds. D. a decrease in the yield on municipal bonds.
Which of the following statements is most accurate about advanced economies?
A. Economies experience a positive growth trend over the short run but experience significant variability in the long run. B. Economies experience a positive growth trend over the long run but experience significant variability in the short run. C. Economies experience positive and stable growth over both the long run and short run. D. Economies experience little long-run growth in output but can experience significant growth in the short run.