Refer to the information provided in Figure 7.7 below to answer the question(s) that follow. 
Figure 7.7Refer to Figure 7.7 above. If Roller Skates Unlimited moves from isoquant A to isoquant B, the number of roller skates produced
A. remains constant, but input prices have risen.
B. remains constant, but Roller Skates Unlimited uses more capital and more labor.
C. increases.
D. decreases.
Answer: C
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
During a demand-pull inflation, if the Fed tries to maintain a level of real GDP above potential GDP, the AD curve will ________ and the AS curve will ________
A) not shift; shift rightward continuously B) shift rightward continuously; shift rightward continuously C) shift rightward once; shift rightward continuously D) shift rightward continuously; not shift E) shift rightward continuously; shift leftward continuously
Allocative efficiency occurs when
A) we cannot produce more of any good without giving up some other good that we value more highly. B) we cannot produce more of any one good without giving up some other good. C) marginal benefit exceeds marginal cost. D) opportunity costs are decreasing.
Joe's demand for spring water can be represented as p = 10 - Q (where p is measured in $/gallon and Q is measured in gallons). He recently discovered a spring where water can be obtained free of charge. His consumer surplus from this water is
A) $0. B) $50. C) $100. D) unknown based upon the information provided.