As recessions begin, income
a. and unemployment both fall.
b. falls and unemployment rises.
c. and unemployment both rise.
d. rises and unemployment falls.
Answer: b. falls and unemployment rises.
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What is a downside of trade protection?
a. Instead of protecting U.S. interests and giving domestic manufacturing an advantage over items manufactured elsewhere, it can have the unintended effect of driving the manufacturing completely out of the country. b. It can give U.S. interests and domestic manufacturing too much of an advantage over items manufactured elsewhere, having the unintended effect of driving the manufacturing completely out of the country. c. It can give U.S. interests and domestic manufacturing too much of an advantage over items manufactured elsewhere, having the unintended effect of bringing more manufacturing into the country than can be handled. d. Instead of protecting U.S. interests and giving domestic manufacturing an advantage over items manufactured elsewhere, it can have the unintended effect of bringing more manufacturing into the country than can be handled.
The "unfair-competition" argument might be cited by an American who believes that
a. almost every country has a comparative advantage, relative to the United States, in producing almost all goods. b. young industries should be protected against foreign competition until they become profitable. c. the American automobile industry should be protected against Japanese firms that are able to produce automobiles at relatively low cost. d. the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.
In a fractional-reserve banking system with no excess reserves and no currency holdings, if the central bank buys $100 million worth of bonds,
a. reserves and the money supply increase by less than $100 million. b. reserves increase by $100 million and the money supply increases by $100 million. c. reserves increase by $100 million and the money supply increases by more than $100 million. d. both reserves and the money supply increase by more than $100 million.
Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C B. B; C C. B; A D. D; B