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.  

Free entry means that

a. the government pays any entry costs for individual firms. b. government-funded research lowers the costs of patents and other barriers to entry. c. a firm's marginal cost is zero. d. no legal barriers prevent a firm from entering an industry.

Under a flexible exchange rate system, an increase in the value of the U.S. dollar in terms of other currencies is referred to as

A. a monetizing of the U.S. dollar. B. a depreciation of the U.S. dollar. C. an appreciation of the U.S. dollar. D. a devaluation of the U.S. dollar.