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1. Ronald Reagan ran for office with economic proposals that focused on businesses. The idea was that favorable tax policies and less regulation would make it easier/more profitable for firms to produce. Circumstances didn't really let these policies be fully implemented, but if they had been successful, the long run effect of these changes would have been _______ in the price level and ________ in real output.
A - none of the listed options
B - decrease, no change
C - decrease, increase
D - increase, decrease
E - increase, no change
2. Most economists agree that savings is key to economic growth. This means that in the short run some consumption must be sacrificed, but in the long run the economy can produce more goods and services. In other words, in the short run savings ______________ and in the long run this _______________.
A - lowers AS, lowers AS
B - raises AD, lowers AS
C - lowers AD, raises AD
D - lowers AD, raises AS
E - none of the listed options
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