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.  

For this question, assume that expectations of productivity are slow to adjust. Further assume that A had been increasing by 6% a year. Now suppose that A only increases by 2% in period t. This slowdown in productivity growth will cause

A) the PS relation to shift up more than the WS relation. B) the WS relation to shift up more than the PS relation. C) the natural rate of unemployment to fall. D) the real wage to fall.

As the number of firms in an oligopoly increases, the magnitude of the

a. output effect increases. b. output effect decreases. c. price effect increases. d. price effect decreases.