Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential
B. higher; potential
C. higher; higher
D. lower; higher
Answer: B
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Lee and Cody are playing a game in which Lee has the first move at A in the decision tree shown below. Once Lee has chosen either aggression or cooperation, Cody, who can see what Lee has chosen, must choose either aggression or cooperation at B or C. Both players know the payoffs at the end of each branch. 
If Lee chooses aggression, Cody will respond with ________, and if Lee chooses cooperation, Cody will respond with ________.
A. aggression; aggression B. cooperation; aggression C. cooperation; cooperation D. aggression; cooperation
For the classical economists, the quantity theory of money provided an explanation of movements in the price level. Changes in the price level result
A) from proportional changes in the quantity of money. B) primarily from changes in the quantity of money. C) only partially from changes in the quantity of money. D) from changes in factors other than the quantity of money.
If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ________ in the production of that good.
A. absolute advantage and possibly a comparative advantage B. absolute advantage C. comparative advantage and an absolute advantage D. comparative advantage
Assume two goods are substitutes. Ceteris paribus, a decrease in the price of one good will cause the equilibrium price of the other good to
A. Increase and the equilibrium quantity of the other good to decrease. B. Decrease and the equilibrium quantity of the other good to decrease. C. Decrease and the equilibrium quantity of the other good to increase. D. Increase and the equilibrium quantity of the other good to increase.