Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap.  

An advantage of the personal consumption expenditures price index (PCE) over the Consumer Price Index (CPI) as a measure of inflation is that the PCE

A) is a fixed market-basket price index that does not allow the mix of products to change each year. B) includes the prices of consumer services, but not consumer goods. C) includes the prices of more consumer goods and services. D) includes the prices of consumer goods, but not consumer services.

Other things being equal, if input prices rise in a country, then there would be

A) cost-push inflation. B) demand-pull inflation. C) cost-push deflation. D) more production and a lower price level.