Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2.
B. P1 and Y2.
C. P4 and Y2.
D. P1 and Y1.
Answer: B
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A Pareto improvement is
a. an action in which the gains to the gainers outweigh the losses to the losers b. any action that does not harm a third party c. an action that makes at least one person better off, and no one worse off d. any action that involves a side payment to a third party e. the typical outcome of government action
Based on the graph showing the effective federal funds rate, once interest rates bottomed out after the 2001 recession, they ______.
a. levelled off for several years
b. began an upward trend that is still ongoing
c. increased consistently for several years
d. went up slightly one year then dropped rapidly
Consider a used car market in which half the cars are good and half are bad (lemons). If buyers are rational, the prices being offered for used cars will result in
A) an equal proportion of a good cars and lemons being sold in an efficient market. B) a larger proportion of good cars being sold and consequently, consumer surplus is increased. C) a larger proportion of lemons being sold and consequently, producer surplus is increased. D) an equal proportion of good cars and lemons being sold in an inefficient market.
Refer to the information provided in Figure 13.3 below to answer the question(s) that follow. 
Figure 13.3Refer to Figure 13.3. This firm's marginal revenue will be positive at
A. all prices. B. $14. C. $6. D. prices between $8 and $12.