Ersatz Kreme will sell its filling to Hunky Donuts only if Hunky Donuts agrees not to buy filling from other suppliers. This is an example of

Both the long-run and short-run aggregate supply curves will shift when

A) the endowments of the factors of production change. B) the government increases defense spending. C) an event occurs which is expected to last only a short period of time. D) they are both upward sloping.

Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume (MPC) is 0.75, and the government follows Keynesian economics by using expansionary fiscal policy to increase aggregate demand (total spending). If an increase of $1,000 billion aggregate demand can restore full employment, the government should:

a. increase spending by $250 billion. b. decrease spending by $750 billion. c. increase spending by $1,000 billion. d. increase spending by $750 billion.