Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C
B. D; B
C. A; B
D. B; C
Answer: B
You might also like to view...
Refer to Scenario 3.2 below to answer the question(s) that follow.SCENARIO 3.2: Lettuce and spinach are substitutes. Lettuce and tomatoes are complements. Lettuce is a normal good. During the winter, about 20% of the lettuce crop was destroyed by flooding.Refer to Scenario 3.2. If at the same time that part of the lettuce crop was destroyed, consumer income also decreased, then, ceteris paribus, in the market for lettuce this would have caused
A. the equilibrium price to either increase, decrease, or remain the same and the equilibrium quantity to decrease. B. the equilibrium price to decrease. The equilibrium quantity could have increased, decreased, or remained the same. C. both the equilibrium price and quantity to decrease. D. the equilibrium price to increase and the equilibrium quantity to decrease.
From 1990 to 2013, mortality under age 5 has ________ and the literacy rate has ________ in China.
A. increased; decreased B. decreased; increased C. decreased; decreased D. increased; increased