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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The main goals of monetary policy include all of the following EXCEPT
A) attaining the maximum sustainable growth of potential GDP. B) keeping the unemployment rate close to the natural unemployment rate. C) keeping the long term nominal interest rate equal to the real interest rate plus the inflation rate. D) keeping the inflation rate low. E) keeping the long-term interest rate at a moderate level.
What is a welfare state?
What will be an ideal response?
Which of the following best defines foreign exchange?
a. a trade between two countries b. the market where exporting and importing activities take place c. the price of a currency relative to another currency d. the currency of another country used for trading e. the dollars that the United States uses to buy goods from other countries
Which of the following correctly defines a budget constraint?
a. A model that economists use for illustrating the choices that individuals face in a situation of scarcity b. A model that shows the level of satisfaction or pleasure that people receive from their choices c. A model that shows the combinations of output that an economy can produce, given a level of technology d. A model that represents the allocation that society most desires