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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The amount by which actual output falls short of potential output is called: a. a deadweight loss
b. real GDP. c. a recessionary gap. d. the full-employment output. e. an expansionary gap.
Income is more unequally distributed:
a. than wealth b. today than it was 40 years ago c. at a point in time than over the course of a lifetime d. both b. and c.
This graph illustrates the marginal costs and marginal benefits of acquiring information before making a major purchase.
If the original curves are MB0 and MC0, the optimal quantity of information about this product is:
A. I3. B. I2. C. I4. D. I1.
A price increase will cause an increase in total revenue when:
A. the price effect outweighs the quantity effect. B. demand is perfectly elastic. C. demand is unit elastic. D. the quantity effect outweighs the price effect.