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.

Suppose the U.S. government encouraged consumers to trade in their old automobiles for more efficient, new models by paying up to $5,000 for the old automobiles

These consumers who did trade in their old automobiles to take advantage of the government offer would be exemplifying the economic idea that A) people are rational. B) people respond to economic incentives. C) optimal decisions are made at the margin. D) equity is more important than efficiency.

You're the president of the United States and your economic advisor tells you that the economy is in a state of stagflation. Are you happy? Stagflation refers to

a. inflation and low unemployment b. high unemployment and low levels of inflation c. high inflation, high unemployment, and low economic growth d. low inflation, low unemployment, and low economic growth e. low inflation, low unemployment, and high economic growth