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 your nominal income this year is 5 percent higher than last year. If the inflation rate for the period was 3 percent, then your real income was:

a. increased by 1.67 percent. b. increased by 2 percent. c. increased by 8 percent. d. decreased by 0.6 percent.

Monopolistic competition is like perfect competition in that they both experience?

a. downward sloping demand curves b. product differentiation c. easy entry and exit from the market thus eliminating long-run profits d. barriers to production to keep other market participants out in the long run