Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential
B. expansionary; lower; potential
C. expansionary; higher; potential
D. recessionary; lower; lower
Answer: A
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The advantages of a currency union may extend to political relationships, too. How?
A) Currency unions, unfortunately, create political dissension. B) Currency unions can be used by the larger nations to grab political power. C) Currency unions reduce each nation's individual political power. D) Currency unions enhance each nation's identification with other nations in the currency union.
Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C B. B; C C. B; A D. D; B
Endogenous growth theory rejects the assumption of exogenous
a. production functions. b. knowledge. c. technology. d. both b and c. d. all of the above.
Perfect competition and monopolistic competition are similar in that both market structures include
A) price-taking behavior by firms. B) a homogeneous product. C) no barriers to entry. D) very few firms.