In reality, AD rarely ________; however, the economy performs as ...

[awywial]

In reality, AD rarely ________; however, the economy performs as though it does when it ________.
 
  A) decreases; fluctuates with potential GDP
  B) increases; decreases at a pace much slower than potential GDP
  C) stagnates; increases at a pace much faster than potential GDP
  D) decreases; increases at a pace much slower than potential GDP
  E) decreases; increases at a pace much faster than potential GDP

Question 2

In the figure above, if the firm is regulated using an average cost pricing rule, the firm
 
  A) avoids an economic loss, but produces less than the efficient quantity and creates a deadweight loss.
  B) incurs an economic loss, but produces the efficient quantity and creates a deadweight loss.
  C) avoids an economic loss, is able to produce the efficient quantity, and therefore avoids creating a deadweight loss.
  D) avoids an economic loss, produces the efficient quantity, and creates a deadweight loss.
  E) incurs an economic loss, produces the efficient quantity, and avoids creating a deadweight loss.

[Chelseyj.hasty]

Answer to Question 1

D

Answer to Question 2

A

[awywial]

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[cam1229]

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