The aggregate demand-aggregate supply model shows that closing an expansionary gap involves deflation and closing a recessionary gap involves inflation.

If the United States imposes a tariff on a good, then

A) domestic consumption of the good decreases. B) foreign production of the good increases. C) the government makes less revenue than it would have gained if it imposed a quota. D) foreign consumption of the good decreases. E) domestic production of the good decreases.

If marginal cost is less than average variable cost and output increases, average total cost ________ and average variable cost ________

A) increases; increases B) decreases; decreases C) decreases; increases D) increases; decreases