Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 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. B; C
C. B; A
D. D; B
Answer: D
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Monetizing the deficit contributes to the inflationary pressures that are already present in the economy.
Answer the following statement true (T) or false (F)
The presence of a negative externality is likely to give rise to significant market failures when: a. property rights are not well-defined
b. property rights are well-defined. c. there are few victims of pollution and few polluters. d. transaction costs are relatively low.
The price elasticity of demand increases with the length of the period considered because
A. consumers' incomes will increase over time. B. the demand curve will shift outward as time passes. C. consumers will be better able to find substitutes. D. all prices will increase over time.
Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B. Kyle will be considered as:
A. cyclically unemployed. B. frictionally unemployed. C. structurally unemployed. D. employed.