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
Answer: C
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As a result of a war in the country of Omega, refugees flee to the country of Alpha to seek employment. Holding other factors constant, the influx of refugees will ________ the real wage in Alpha and ________ employment in Alpha.
A. decrease; decrease B. increase; increase C. increase; decrease D. decrease; increase
When a society achieves production efficiency, it is
A) definitely producing at a point on its PPF. B) perhaps producing at a point on its PPF and perhaps producing at a point inside its PPF. C) definitely producing that combination of goods and services that society values most highly. D) not fully employing all of its available resources to produce goods and services. E) enjoying a free lunch.
The aggregate supply curve shows the total quantity of output that firms are willing and able to supply at a given inflation rate. This is the same relationship that is shown by the
A) aggregate expenditure curve. B) Phillips curve. C) MP curve. D) IS curve.
Jenny's hourly wage rate was increased from $17 to $21. As a result of the wage increase, Jenny desires to work fewer hours and take more hours of leisure. For Jenny
A. the substitution effect must equal the income effect. B. the income effect must be zero. C. the income effect dominates the substitution effect. D. the substitution effect dominates the income effect.