The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A
B. recessionary; C
C. recessionary; B
D. expansionary; A
Answer: D
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You are considering buying a share of stock in XYZ Corporation. At the end of years 1, 2, and 3 the stock will pay you a dividend of $15 . In addition, at the end of the third year you expect to sell the share of stock for $100 . If the interest rate is 3%, how much is the share of XYZ stock worth to you today?
a. $123.14 b. $133.94 c. $137.96 d. $145.00
Which of the following does not characterize a competitive market?
A.) Many firms B.) Advertising by individual firms C.) Low barriers to entry D.) Zero economic profit in the long run
When recessions are the result of slowing growth in potential output, the government's best policy is to:
A. reduce government spending. B. promote saving and investment. C. decrease aggregate supply. D. increase aggregate demand.
Your allergies are bad this summer so your allergist writes you a prescription to relieve your symptoms. When you get to the pharmacy, you notice the name brand allergy medicine is more expensive than its generic equivalent. You purchase the generic
equivalent and demonstrate all of the following EXCEPT A) the principle of substitution of one product for another. B) the principle of diminishing marginal utility. C) when price decreases, the quantity demanded increases. D) a price change may affect consumer optimum.