The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B
B. recessionary; C
C. recessionary; A
D. expansionary; A
Answer: C
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The Arrow impossibility theorem
A) explains why it is impossible, in most cases, to eliminate special-interest legislation after it has become law. B) explains why people can be rational as well as ignorant at the same time. C) explains why candidates for public office must represent the preferences of the political middle. D) explains why voting systems do not consistently represent the preferences of voters.
An excess demand in a market implies that
a. the amount demanded is less than the amount supplied b. price is greater than the equilibrium price c. a shortage of the good exists d. a surplus of the good exists e. the government must implement a price ceiling
During 2009-2010, the federal budget
A) ran a surplus of approximately 2 percent of GDP. B) ran a deficit of approximately 2 percent of GDP. C) ran a deficit of approximately 10 percent of GDP. D) was balanced during both years.
A perfectly elastic supply curve is
A. a straight line that crosses the horizontal axis. B. a vertical straight line. C. a straight line coming out of the origin. D. a horizontal straight line.