Refer to the accompanying figure.Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 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. B; A
B. B; C
C. D; B
D. D; C


Answer: C

Economics

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High and unexpected inflation has a greater cost

a. for those who borrow than for those who save. b. for those who hold a little money than for those who hold a lot of money. c. for those who have fixed nominal wages than for those who have nominal wages that adjust with inflation. d. All of the above are correct.

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A. 2800 B. 2400 C. 2000 D. 1800

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Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)?

A) The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. B) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. C) The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. D) The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

Economics