Based on the figure, the economy is initially in long-run equilibrium at point A. If there is a favorable supply shock that increases potential output and shifts the long-run aggregate supply curve from LRAS to LRAS', then the new long-run equilibrium is reached at point: 
A. B
B. D
C. E
D. C
Answer: C
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In the short run, a rise in the price level brings a ________ in the real interest rate that ________ investment, bringing ________ in the quantity of real GDP demanded
A) rise; decreases; a decrease B) fall; decreases; a decrease C) fall; increases; an increase D) rise; increases; an increase E) rise; decreases; an increase
When actual real GDP is equal to the natural real GDP, the unemployment rate is
A) zero. B) at its "natural" rate. C) accelerating. D) decelerating.
According to revealed preference a consumer that chooses to smoke cigarettes:
A. derives more utility from smoking than the goods they could have purchased with that same money. B. derives more happiness from smoking than the goods they could have purchased with that same money. C. is minimizing their utility given the options available to them. D. is behaving irrationally.
The essential feature of the market mechanism is:
A.) That every consumer is concerned about the welfare of others. B.) The price signal for both consumers and producers. C.) Equity in the distribution of income and housing. D.) Government taxation of profits.