In the short run, a decline in aggregate demand would be associated with:
a. an inward shift of the Phillips curve.
b. an outward shift of the Phillips curve.
c. an upward movement along the Phillips curve.
d. a downward movement along the Phillips curve.
e. no change along the Phillips curve.
d
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The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A B. recessionary; C C. recessionary; B D. expansionary; A
To offset the effect of households and firms deciding to hold less of their money in checking account deposits and more in currency, the Federal Reserve could
A) raise the discount rate. B) buy Treasury securities. C) raise the required reserve ratio. D) lower bank taxes.
If technological advance is crucial to growth, then countries must increase their spending most rapidly on
a. investment b. education c. research and development d. basic human needs e. all of the above
The Coase solution to the externality problem only works when bargaining costs are high
a. True b. False