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Based on the Figure Below

Question 126

Multiple Choice

Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap. Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD<sup>1</sup> to AD will lead to a short-run equilibrium at__ creating _____gap. A) D; an expansionary B) D; a recessionary C) B; no output D) B; recessionary


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

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