The marginal cost curve intersects the average fixed cost curve at its minimum
Indicate whether the statement is true or false
False. Marginal cost intersects average variable cost (and average cost) at its minimum.
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A decrease in the price level in an economy will _____
a. shift the aggregate demand curve to the right b. shift the aggregate demand curve to the left c. increase the level of aggregate quantity demanded d. decrease the level of aggregate quantity demanded e. shift the aggregate expenditure line downward
The diagram below shows the production possibilities frontier (PPF) for a country that produces guns (G) and butter (B). Most people in the country prefer guns, so in the absence of international trade, point A represents the combination of G and B that maximizes welfare. The slope of the PPF at point A is equal to -2. 
Over the long run, do you think this country would be better off by shifting its production towards guns or butter? Please identify the most efficient production point in the PPF with trade. What would be the ratio of the prices at that point?
What will be an ideal response?
Suppose a recession occurs as a result of a negative supply shock, and instead of the economy naturally working its way back to equilibrium, the government uses policy to shift the aggregate demand curve to fight the recession. Using policy this way would
A) bring real GDP back to potential GDP more quickly but would result in a permanently higher price level. B) bring real GDP back to potential GDP more slowly but would bring the price level back to the original price level more quickly. C) quickly result in a new, higher level of real GDP and a permanently lower price level. D) bring the price level back to its original level more quickly but would result in a permanently lower level of potential GDP.
Henry George claimed that land-rent taxes would not impair economic efficiency because:
A. They do not result in a change in the amount of land available B. Landowners are, as a group, financially secure and able to pay the taxes C. The supply of land is infinitely elastic D. Rents represent a small part of income paid to American resource suppliers, so taxes on wages and salaries are more disruptive