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
You might also like to view...
Explain how games with more than three players are represented graphically
What will be an ideal response?
Analysts cite figures on the number of uninsured in the U.S. as low as 10 million and as high as 60 million. Which of the following is a true statement?
a. The uninsured are all free riders. b. Most of the uninsured have health problems and are not able to get private health insurance. c. Most of the uninsured have some labor-force connection—either working or a dependent of someone who is working. d. The lack of health insurance means that the individual has virtually no access to medical care. e. Once you lose your health insurance it is extremely difficult to get reinsured.
If average labor productivity increases while population and the number of employed workers remain constant, then total output:
A. decreases. B. may increase or decrease. C. remains constant. D. increases.
In the Keynesian transmission mechanism, if the money market is in the liquidity trap, an increase in the money supply will
A) cause total expenditures and aggregate demand to increase. B) cause total expenditures and aggregate demand to decrease. C) have no impact on total expenditures and aggregate demand. D) cause total expenditures to increase and aggregate demand to decrease. E) cause total expenditures to decrease and aggregate demand to increase.