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
You might also like to view...
The table above gives a nation's government outlays and tax revenues for 2012 through 2016. During which years did the country have a budget surplus?
A. 2012 and 2013 B. 2016 only C. 2015 only D. 2014 and 2016 E. all except 2015
Compared to the world, the rate of U.S. population growth is
A) slower than in the world as a whole. B) about the same as in the world as a whole. C) much faster than in the world as a whole. D) incomparable because U.S. residents are born with a much greater chance of accumulating a lot of human capital. E) incomparable because we do not have accurate world population statistics.
When economic growth (a gradual shift of LRAS to the right) expands the production possibilities of an economy,
a. a higher rate of real output can be achieved in the short run, but it cannot be sustained in the long run. b. a larger output can be attained even if unemployment remains at its natural rate. c. the general level of prices will rise if the money supply is held constant. d. the equilibrium in the goods and services market will be disrupted.
Economic rent applies to
A) land only and nothing else. B) real property only. C) all resources. D) any resource in fixed supply.