Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2.
B. P2 and Y3.
C. P3 and Y1.
D. P2 and Y2.
Answer: B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
If there are five firms in an industry, each with a market share of 20 percent, the Herfindahl-Hirschman Index (HHI) of concentration is
A) 2000. B) 400. C) 100. D) 20.
The price system is constantly sending __________ and ___________ thousands of signals.
Fill in the blank(s) with the appropriate word(s).
Exhibit 2 shows that before trade, the producer surplus equaled ______; after trade, the producer surplus ______.
a. a + b + c; expands to a + b + c + d
b. d; expands to b + c + d
c. e + f; expands to b + c + d + e + f
d. a + b + c; expands to a + b + c + e + f