The production of durable goods is more stable than the production of nondurables over the business cycle.

At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is

A) 7/5 of a ton of bananas per ton of coffee. B) 1/2 of a ton of bananas per ton of coffee. C) 5/7 of a ton of bananas per ton of coffee. D) 2 tons of bananas per ton of coffee.

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. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary