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
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A result of selling concert tickets cheaply, that is below the equilibrium price, will be that
a. only those with nothing else to do will wait in line to buy a ticket. b. ticket buyers' benefits increase, at the expense of the performers. c. the costs associated with competition among buyers for the limited number of tickets will create deadweight losses. d. more tickets will be sold than if the price were at the market equilibrium.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Which of the following represents the relationship between disposable income (DI), consumption (C), and saving (S)?
A) DI = C * S
B) DI + C = S
C) DI = C - S
D) DI = C + S
Short-run economic growth comes from:
A. Expanding the production possibilities curve. B. A rightward shift of aggregate supply. C. Increased or more efficient use of existing resources. D. A population decrease which increases output per person.