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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Investment and saving decisions are assumed by economists to depend on the ________ interest rate
A) expected nominal B) nominal C) expected real D) real
In the broadest sense, economics is the study of
a. production methods. b. how society manages its scarce resources. c. how households decide who performs which tasks. d. the interaction of business and government.
Explain how collusion makes firms better off. Given the incentives to collude, briefly explain why every industry does not become a cartel
What will be an ideal response?
During a recession, the
A) cyclical rate of unemployment is positive. B) natural rate of unemployment has fallen. C) cyclical rate of unemployment is zero. D) cyclical rate of unemployment is negative.