Which of the following policies should be used to close an inflationary GDP gap?
A. Increases in government spending and increases in transfer payments
B. Tax increases
C. Increases in government spending
D. Increases in transfer payments
B. Tax increases
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Refer to the above graph for a profit-maximizing monopolist. The firm will set its price at:
The elasticity of a perfectly horizontal line is ______; the elasticity of a perfectly vertical line is _____.
Fill in the blank(s) with the appropriate word(s).
Risk-averse individuals will diversify their investments because this will:
a. increase their expected returns. b. provide them with some much-needed variety. c. reduce the variability of their returns. d. reduce their transaction costs.
Refer to the information provided in Figure 15.2 below to answer the question(s) that follow. 
Figure 15.2 Refer to Figure 15.2. At We Do Hair, a monopolistically competitive firm, the ________ perm is $32.
A. profit-maximizing price for a B. marginal cost of a C. average total cost of a D. profit on each