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

Multiple Choice

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

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