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.

A trend that has been reinforced by many developing countries is privatization. Privatization refers to

A) purchasing large companies and turning them into state-owned enterprises. B) investing government money in large, privately-owned companies. C) exchanging bonds for shares in state-owned enterprises. D) selling large state-owned enterprises to private owners in the financial sector. E) selling large state-owned enterprises to private owners in key areas such as electricity, telecommunications, or petroleum.

"Countries are poor because they cannot afford to save and invest" is called the:

a. vicious circle of poverty. b. savings-investment trap. c. LDC trap. d. cycle of insufficient credit.