Refer to Figure 17.1. What is the output level where the average cost is at its minimum?
A. 7 units
B. 6 units
C. 8 units
D. 9 units
Answer: D
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
The theory of purchasing power parity cannot fully explain exchange rate movements in the short run because
A) all goods are identical even if produced in different countries. B) monetary policy differs across countries. C) some goods are not traded between countries. D) fiscal policy differs across countries.
Commitment devices can be:
A. a tool to help people avoid temptation. B. an informal arrangement. C. formal policies set up through an employer or third party. D. All of these statements are true.
A perfectly competitive firm faces a:
A. perfectly elastic demand function. B. demand function with unitary elasticity. C. perfectly inelastic demand function. D. None of the answers is correct.