Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.

Which of the following is true? Partial equilibrium analysis will

A) overstate the impact of a tax for both substitutes and complements. B) understate the impact of a tax for both substitutes and complements. C) understate the impact of a tax for complements and overstate the impact for substitutes. D) understate the impact of a tax for substitutes and overstate the impact for complements.

There is substantial agreement among scholars that at least two functions of government are legitimate. These two functions are the

a. protection of the rights of individuals to their person and property and the provision of goods that cannot easily be provided through markets. b. redistribution of income from some individuals to others and the waging of war to expand the nation's territory. c. production of postal services and cable television. d. taxation of goods that are generally considered immoral or bad and the regulation of large corporations.