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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Robert Lucas Jr. adapted the fooling model to his own way of thinking by replacing that model's assumption of
A) continuous market-clearing. B) imperfect information. C) the natural rate hypothesis. D) the gradual correction of expectational errors.
Asking people to indicate their economic values in a survey is an example of what type of economic valuation?
a. Travel cost method b. Contingent valuation c. Hedonic pricing d. Production function valuation e. Avoided cost valuation
The payroll tax for income earners at low income levels in the United States is
A. progressive. B. uniform. C. proportional. D. regressive.
Under a flexible exchange rate system, one factor that does NOT directly affect rates of exchange is
A) changes in the inflation rate in each country. B) changes in productivity in each country. C) changes in gold holdings in each country. D) changes in economic stability in each country.