Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.

Which of the following is likely to happen if the government lowers tax rates?

A) Price level will fall. B) Investment will decrease. C) Consumption will increase. D) Unemployment will increase.

Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat to rise. Holding everything else constant, how would this affect the market for corn (a substitute for wheat)?

A) The supply of corn would decrease and the equilibrium price of corn would increase. B) The demand for corn would increase and the equilibrium price of corn would increase. C) The demand for corn would increase and the equilibrium price of corn would decrease. D) The demand for corn would decrease because consumers could afford to buy less wheat and corn.