One of the reasons why the AD curve slopes downward is that as the
A) price level rises, purchasing power rises.
B) price level falls, purchasing power rises.
C) nation's income level rises, purchasing power rises.
D) nation's income level rises, purchasing power falls.
E) This is a trick question, because the AD curve is upward sloping.
B
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A government spending and taxation policy to create full employment without inflation is known as
a. closing an inflationary gap b. fiscal policy c. closing a recessionary gap d. a balanced budget e. a balanced budget multiplier
In the diagram below, the following would be a possible explanation for the difference between PPF1 and PPF2. (Assume the starting point is with all butter and no guns.) 
A. A dramatic shock to the resources needed to produce butter. B. A technological improvement in the production of butter and guns. C. A technological improvement in the production of butter. D. A technological improvement in the production of guns.