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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The theory that there are no predictable trends in securities prices that can be used to "get rich quick" is the
A) dartboard theory. B) random walk theory. C) Wall Street theory. D) inefficient market hypothesis.
Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model? a. The quantity of real loanable funds per time period falls and real GDP
falls. b. The quantity of real loanable funds per time period falls and real GDP rises. c. The quantity of real loanable funds per time period rises and real GDP remains the same. d. The quantity of real loanable funds per time period and real GDP remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The use of pollution charges to reduce pollution confronts the problem of
A. free riders who avoid revealing benefits from abatement. B. determining specific individual damages and appropriate charges associated with pollutants. C. necessarily lowering the price of the products. D. requiring no agency to administer the tax.
An apple farmer must decide how many apples to harvest for the world apple market. He knows that there is a one-third probability that the world price will be $1, a one-third probability that it will be $1.50, and a one-third probability that it will be $2. His cost function is C(Q) = 0.01Q2. The expected profit-maximizing quantity is:
A. 150. B. 0. C. 90. D. 75.