Suppose the economy is in long-run equilibrium at an inflation rate of 1% Then inflation expectations rise to 2% and inflation rises to 3%. The increase in expected inflation shifts the short-run Phillips curve
a. right. Overall, unemployment moves above its natural rate.
b. right. Overall, unemployment moves below its natural rate.
c. left. Overall, unemployment moves above its natural rate.
d. left. Overall, unemployment moves below its natural rate.
b
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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
Suppose early one Friday morning the economics club buys 200 donuts at 25 cents each, and plans to sell all of them later in day on campus for 50 cents each
Only 60 donuts are sold at 50 cents, however, and by early afternoon the club is seen trying to unload the remaining donuts for 10 cents each. What is the correct price of one of donut? A) 10 cents B) 25 cents C) 50 cents D) Stated this way, the question is meaningless.
As output increases, the ATC
a. increases. b. decreases. c. remains constant. d. falls and then rises.
Suppose you are deciding whether or not to increase production. You are currently making a profit. If you produce one more unit, your increase in cost will be $10, your average variable costs will increase to less than that, and your average fixed costs will decrease. Finally, your average revenue will increase to $10, but your increase in revenue will be $10. You should
A. increase production by exactly 1 unit. B. increase production by at least 1 unit. C. leave production unchanged because profit is maximized where you are. D. redo the math associated with decreasing production because that may result in greater profit.