Refer to the above figure. If the economy is currently operating at point C, then there is
A. unemployment.
B. a recessionary gap.
C. deflation.
D. an inflationary gap.
Answer: D
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A highly profitable cartel arrangement among sellers contains the seeds of its own disintegration because
A) a monopoly arrangement is more unstable than an oligopoly arrangement. B) a price maintained above each cartel member's marginal cost is an incentive to offer secret price reductions to attract additional business. C) monopoly agreements will, in the long run, reduce net revenue to zero. D) net revenue for the cartel as a whole could be increased by producing at the level where marginal revenue equals marginal cost for each cartel member. E) the cartel members will have a strong incentive to reduce quality.
Tariffs to limit imports to "protect U.S. jobs" will also
A) stimulate exports. B) limit exports. C) decrease import prices. D) reduce domestic production of import-threatened products.
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What will be an ideal response?
Suppose that a rules-based monetary policy proposal specifies that the money supply will grow 3 percent each year. If velocity grows 1 percent this year and Real GDP grows 2 percent, the price level will __________ by __________ percent
A) rise; 3 B) fall; 2 C) rise; 2 D) rise; 6 E) fall; 5