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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A manager invests $400,00 . in a technology to reduce overall costs of production. The company managed to reduce their cost per unit from $2 to $1.85 . Ceteris peribus, if the firm continues its production in the same economic environment, the firms accounting profits should
a. increase b. decrease c. stay the same d. does not affect profits
[Appendix; Advanced Material] Restaurants try to buy just enough fish to match the expected walk-ins and reservations. If they buy a lot more fish, in the language of revenue management:
a. Spoilage increases b. Spillage increases c. Overbooking increases
When a society cannot produce all the goods and services people wish to have, the economy is experiencing
a. scarcity. b. surpluses. c. inefficiencies. d. inequalities.
Procyclical policy:
What will be an ideal response?