That which we forgo, or give up, when we make a choice or decision is called
A. marginal cost.
B. real cost.
C. opportunity cost.
D. out-of-pocket cost.
Answer: C
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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; A B. Falling; A; C C. Falling; B: C D. Rising; A; C
Classical economists and Keynesian economists respect each other but hold very different views about how to read the quantity theory of money. According to the classical view,
a. velocity is constant (Keynesians agree), which means changes in price will cause changes in price or quantity (Keynesians disagree) b. quantity is constant (Keynesians agree), which means changes in the money supply could cause either changes in velocity or changes in prices (Keynesians disagree) c. velocity and price are constant (Keynesians disagree) so that changes in the money supply cause changes in quantity (Keynesians disagree) d. velocity and quantity are constant (Keynesians disagree) so that changes in the money supply only cause changes in prices (Keynesian disagree) e. velocity is constant while quantity is variable (Keynesians disagree) so that changes in the money supply change both price and quantity (Keynesians disagree)
Suppose the economy is in long-run equilibrium. In a short span of time, there is a sharp rise in the stock market, an increase in government purchases, an increase in the money supply and a decline in the value of the dollar. In the short run
a. the price level and real GDP will both rise. b. the price level and real GDP will both fall. c. neither the price leave nor real GDP will change. d. All of the above are possible.
Figure 20-3
Figure 20-3 shows a worker’s backward-bending supply curve of labor. Which of the following statements is correct?
A. The substitution effect of a change in the wage dominates the income effect at all points on the curve. B. The income effect of a change in the wage dominates the substitution effect at all points on the curve. C. Above W*, the substitution effect of a change in the wage dominates the income effect; below W*, the income effect dominates the substitution effect. D. Above W*, the income effect of a change in the wage dominates the substitution effect; below W*, the substitution effect dominates the income effect.