Which one of the following is TRUE about the effects of fiscal policy?
A) A decrease in government spending will decrease aggregate demand.
B) A tax change does not have any direct or indirect effects on aggregate demand.
C) A decrease government spending will increase aggregate supply.
D) An increase in government spending will reduce aggregate demand.
A
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Which of the following does NOT affect the long-run aggregate supply curve?
A) technology B) endowments of resources C) price level D) production possibilities curve
If a perfectly competitive market is in long-run equilibrium and there is a permanent decrease in demand, then
A) some firms will incur economic losses. B) firms are no longer maximizing profits. C) some firms must immediately exit. D) each firm must produce less output in the new long run equilibrium and earn less economic profit.