Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 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. B; C
C. B; A
D. D; B
Answer: D
Economics
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The financial and opportunity costs consumers pay when looking for a good or service:
a. supply shock b. shortage c. excess supply d. disequilibrium e. search costs
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A country will be able to consume a combination of goods that is not attainable solely from domestic production if
A) the world terms of trade differ from its domestic relative costs. B) the country specializes in one product. C) the country avoids international trade. D) the world terms of trade equal the domestic relative costs. E) the country's domestic production value equals world relative value.
Economics