An example of a public good is:
A. national defense.
B. libraries.
C. timber.
D. natural gas.
A. national defense.
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person. Which country can benefit?
a. only the one with a low level of output per person. b. only the one with a high level of output per person. c. both d. neither
A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock. B. long-run demand shock. C. long-run supply shock. D. short-run demand shock.
When does the free-rider problem arise?
A) when someone who benefits from a good does not have to contribute to paying for it B) when a firm does not have to advertise, because its customers recommend the product to their friends C) when policymakers ignore opportunity costs in making decisions D) when production of a good generates pollution