Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.

A. D; C
B. D; B
C. A; B
D. B; C


Answer: B

Economics

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If a ton of steel sells for $15,000 and a car made from a ton of steel sells for $30,000 . then if all markets are perfectly competitive, how many cars can be made from the last ton of steel used by a profit-maximizing firm?

a. 1/3 car b. 1/2 car c. 1 car d. 1.5 cars

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Which of the following is an example of an externality?

A. Drug abuse affecting David’s health B. Sara taking a break from work C. A transaction between two parties, affecting them alone D. Tom’s smoking affecting his roommate’s health

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The process by which an original increase in aggregate expenditure cycles repeatedly through the economy, thereby producing a larger result, is called the exponential effect

a. True b. False Indicate whether the statement is true or false

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Barton & Matthews Corp, a law firm, announces its acquisition of Fronton Corp Which of the following is likely to occur as a result of this acquisition? a. The value of the Herfindahl-Hirschman Index for the legal services industry will decrease. b. The value of the Herfindahl-Hirschman Index for the legal services industry will increase. c. The market share of each firm in the legal services

industry will increase. d. The market share of each firm in the legal services industry will decrease.

Economics