Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 
A. Rising; A
B. Falling; A; C
C. Falling; B: C
D. Rising; A; C
Answer: B
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The competitive firm's long-run supply curve
a. is always perfectly horizontal. b. includes only that part of the long-run marginal cost curve that lies above long-run average cost. c. includes only that part of the long-run marginal cost curve that is sloping upwards. d. is identical to its long-run average cost curve.
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
When government purchases are increased, the amount of the increase in aggregate demand primarily depends on
A. the size of the multiplier. B. the average propensity to consume. C. income taxes. D. exchange rates.
Which of the following is true at the output level where diminishing marginal product first set in?
a. Both marginal product and marginal cost are at a minimum b. Both marginal product and marginal cost are at a maximum. c. Marginal product is at a maximum and marginal cost is at a minimum. d. Marginal product is at a minimum and marginal cost is at a maximum.