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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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Use the above table. The MPC is
A) 0.09. B) 0.20. C) 0.80. D) 0.91.
Which of the following describes the vicious circle of poverty?
a. Because resources are limited, all economies eventually become poor. b. In the long run, economies cycle between being rich and being poor.c. For an economy to grow requires more consumption goods, which requires less capital goods, which means it will eventually become poor d. Due to excessive consumption, rich economies will destroy their resource base and eventually become poor. e. Poor economies are poor because they do not produce sufficient capital goods, and without the production of sufficient capital goods, they remain poor.
If the imposition of a tariff on a commodity alters the relative international prices of the imposing country's exports to its imports, it is referred to as the
A. production effect of the tariff. B. terms-of-trade effect of the tariff. C. total price effect of the tariff. D. consumption effect of the tariff.