-Based on the Diagram Above,starting from a Long-Run Equilibrium at Point

question 18

Multiple Choice

-Based on the diagram above,starting from a long-run equilibrium at point C,an increase in government spending that increases aggregate demand from ADI to ADI¹ will lead to a short-run equilibrium at point ________,creating _________ gap.

• A) D;an expansionary
• B) D;a recessionary
• C) D;no output
• D) B;an expansionary
• E) B;a recessionary

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Definitions:

Free Trade

refers to the absence of tariffs, quotas, and other governmental barriers to international trade, allowing goods and services to move freely across borders.

Domestic Consumption

Refers to the total amount of goods and services consumed within a country.

Domestic Price

The price of goods within a country's borders, contrasting with the price of goods in international markets.

Free Trade

An economic policy of not discriminating against imports from and exports to foreign jurisdictions, allowing goods and services to move freely across borders.