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
Answer: A
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Which of the following is likely to be included in a country's Gross Domestic Product in a particular year?
A) An unsold inventory of automobiles produced in that year B) The total amount steel used in the production of automobiles in that year C) The total amount of flour used by bakeries to make bread in that year D) An unused stock of goods produced in the previous year
Which of the following is likely to cause the supply curve for steel window frames to shift to the right?
A) A decrease in the cost of production of steel due to a new subsidy B) A fall in the number of steel window frame producers due to factory lockouts C) A rise in the market price of steel window frames due to an increase in demand D) An increase in the wages of labor working in steel firms due to demands by trade unions
A decrease in the real interest rate in the United States will cause net capital outflows to ________ and cause the dollar to ________ relative to other currencies
A) increase; appreciate B) increase; depreciate C) decrease; appreciate D) decrease; depreciate
Answer the following questions true (T) or false (F)
1. "The distribution of income should be left to the market" is an example of a positive economic statement. 2. Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is." 3. "A decrease in the price of tablet computers will decrease the demand for desktop computers." This statement is an example of a normative economic statement.