Which of the following statements is an example of positive economic analysis?
A. The elderly live on a fixed income, so the government has an obligation to keep inflation rates low.
B. The government should worry less about inflation and more about unemployment.
C. The inflation rate is too high.
D. If the government increases the rate of growth of the money supply, the inflation rate will increase, ceteris paribus.
Answer: D
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Economists may disagree about how to solve an economic problem because they
A. use different models to analyze the problem and its solutions. B. have different political and moral beliefs. C. disagree about the facts of the situation. D. All of these responses are correct.
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
Assume that MPS is 0.4. If spending increases by $8 billion, then real GDP will increase by
A. $8 billion. B. $15 billion. C. $20 billion. D. $13.3 billion.
A well-known women's college whose tuition lagged below similar schools found recruiting difficult and enrollment falling. A substantial tuition increase was implemented, and dormitories were soon full again. This can be explained by
a. the law of demand. b. the fact that education at the school was an inferior good. c. the fact that people sometimes base perceptions of quality on price (snob effect). d. elastic demand.