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...
Import restriction in advanced economies deny developing economies access to the food market of the advanced economies. The result is ________ price and ________ farm production in the developing economies
A) lower; larger B) lower; smaller C) higher; smaller D) higher; larger E) stable; smaller
Suppose a drought resulted in a major reduction in the California lettuce crop. In the market for lettuce,
A) the demand curve shifted to the right resulting in an increase in the equilibrium price. B) the supply curve shifted to the left resulting in a decrease in the equilibrium price. C) the supply curve shifted to the left resulting in an increase in the equilibrium price. D) the demand curve shifted to the left resulting in a decrease in the equilibrium price.
Diminishing marginal returns refers to the fact that
a. holding other inputs constant, additional increases in labor lead to smaller changes in output. b. holding other inputs constant, additional increases in labor lead to lower output. c. additional increases in labor always lead to smaller changes in output d. the returns to labor fall as real wages rise.
Productivity growth rates are usually higher in rich countries than in poor countries
a. True b. False Indicate whether the statement is true or false