The reason the short-run macro model suggests that the economy can operate either above or below its potential while in the long-run classical model the economy operates automatically at full employment is that
a. the short-run macro model is flawed and inaccurate
b. the classical model is flawed and inaccurate
c. the two models measure completely different aspects of the economy
d. in the short run, spending affects output, but not in the long run
e. in the short run the role of government in helping the economy return to equilibrium is not considered
D
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The slope of the credit demand curve from the text book implies that the:
A) higher the rate of taxation, the lower the quantity of credit demanded. B) higher the real rate of interest, the higher the quantity of credit demanded. C) higher the real rate of interest, the lower the quantity of credit demanded. D) higher the rate of taxation, the higher the quantity of credit demanded.
If we include environmental degradation and natural resource depletion in GDP, then:
a. GDP would increase. b. GDP would decrease. c. GDP would not change. d. the change is impossible to determine.
Refer to the following nonlinear model which relates W to P, Q, and R:W = aPbQcRdThe computer output form the regression analysis is: 
Based on the info above, if R decreases by 12% (all other things constant), W will
A. increase by 6%. B. increase by 72%. C. decrease by 72%. D. decrease by 6%.
If the demand for tennis shoes increases and a firm's supply curve is upward sloping, then:
A. producer surplus decreases. B. producer surplus does not change. C. producer surplus increases. D. producer surplus may either increase or decrease.