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...
An increase in government expenditure shifts the ________
A) labor demand curve to the left B) labor supply curve to the left C) labor demand curve to the right D) labor supply curve to the right
In reality, the long-run supply curve tends to be:
A. perfectly elastic. B. perfectly inelastic. C. upward sloping. D. downward sloping.
A news story states that "Videotapes lose their appeal as consumers switch to DVDs for movies." In a competitive market for the purchase of videotapes of movies, this situation would lead to a(n):
a. Decrease in the price of videotapes and increase in the quantity sold b. Decrease in the price of videotapes and the quantity sold c. Increase in the price of videotapes and decrease in the quantity sold d. Increase in the price of videotapes and the quantity sold
The credit risk a bank faces is the risk resulting specifically from:
A. the economy entering a recession. B. some of the bank's loans not being repaid. C. the bank experiencing a decrease in deposits. D. interest rates falling.