The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B
B. recessionary; C
C. recessionary; A
D. expansionary; A
Answer: C
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?In the long run, wages and prices are considered to be:
A. ?fixed. B. sticky. C. ?flexible. D. ?unstable.
Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________, 
A. Rising; B; C B. Falling; A; C C. Falling; A; B D. Rising; A; C
A rule of thumb is that a 1% increase in output leads automatically to a reduction in the deficit of what percentage of GDP?
A) 0.5% B) 1% C) 1.5% D) 2%
All of the costs associated with making and enforcing contracts are referred to as
A. alternative costs. B. marginal costs. C. opportunity costs. D. transactions costs.