For a given firm, whenever the ratio of marginal product to input price differs across inputs,
A. it will always be possible to make a cost-saving substitution in favor of the input with the higher MP/P ratio.
B. the market will adjust the price of the higher priced input.
C. the market will adjust the price of the lower priced input.
D. it will always be possible to make a cost-saving substitution in favor of the input with the lower MP/P ratio (except in the case of corner solutions).
Answer: A
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Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C B. B; C C. B; A D. D; B
Which of the following tools is NOT a policy tool of the Fed?
A) last resort loans B) the tax rate on interest income C) the reserve ratio D) open market operations
On the modern Phillips curve, the beginning of a recession is shown by ________
A) an upward movement along the Phillips curve to a higher inflation rate B) an upward shift of the Phillips curve leading to higher inflation rates for any unemployment rate C) a downward shift of the Phillips curve leading to lower inflation rates for any unemployment rate D) a downward movement along the Phillips curve to higher unemployment rates E) none of the above
A decrease in the level of capital inside a nation would cause the:
A. long-run aggregate supply curve to shift to the right. B. long-run aggregate supply curve to shift to the left. C. short-run aggregate supply curve to shift to the right. D. aggregate demand curve to shift to the right.