Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.

Refer to the graph below. Suppose that its shows the S and D graphs in a market where the product has all the characteristics of a public good. In this case, the government should use its coercive power to make:

A. The supply curve shift to the left
B. The supply curve shift to the right
C. The demand curve shift to the left
D. The demand curve shift to the right

In order to maintain a balanced budget, Congress has decided to cut taxes and government spending both by $25 billion. What will happen to GDP?

A. It will increase. B. It will remain the same. C. It will decrease. D. It’s impossible to know without the multiplier.