Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?
A) Unemployment will decline. B) Output will increase.
C) Prices will decline. D) Short-run aggregate supply will shift to the left.
D
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A fixed exchange rate is an exchange rate whose value:
A. is set by official government policy. B. varies according to supply and demand for the currency in the foreign exchange market. C. reflects the comparative advantage of the home country versus other foreign countries. D. is established annually by the International Monetary Fund.
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
The MP curve may be used to represent ________
A) movements of the real interest rate as a direct policy action of the Federal Reserve B) movements of the real interest rate that are independent of direct Federal Reserve action C) how the real interest rate is related to the inflation rate D) all of the above E) none of the above
Once the profit-maximizing output where MR = MC is determined, price is set by
A. adding a standard markup percentage to marginal cost. B. the demand curve. C. making it equal to MR = MC. D. subtracting the marginal cost from total revenue.