Refer to the above figure. What price-output combination would apply under perfect competition?

The principle that people should pay taxes based on the benefits they receive from government services is called the

a. pay principle. b. tax-benefit principle. c. government services principle. d. benefits principle.

Starting from long run equilibrium, in response to a decrease in aggregate demand:

A. The price level will increase more in the long run than in the short run. B. The short run equilibrium level of real output will be greater in the long run than in the short run. C. Neither the price level nor real output will change in the long run. D. The price level will fall and rGDP will also fall if the demand falls.