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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Which of the following was the main reason for increased counterparty risk in the shadow banking system prior to the financial crisis of 2007-2009?
A) increased leverage B) government insuring money market deposits C) many firms borrowing long term for short-term investments D) trading of derivatives on exchanges
People learn to hold a specific quantity of money for the groceries, theater tickets, gasoline, clothes, film, and other items they habitually purchase. This behavior is representative of the:
A. precautionary demand. B. speculative demand. C. transactions demand. D. volatility demand.
Firms that had virtual monopolies, that is control over at least 80 percent of industry production, because of control over an essential resource include all of the following except
A. the DeBeers Diamond Company. B. the International Nickel Company. C. the Ford Motor Company. D. the Standard Oil Company.
Suppose the demand for hot dogs decreases. In the short run, firms that produce hot dogs will experience a fall in prices, which will induce them to:
A. increase production and increase the number of workers. B. decrease production and increase the number of workers. C. decrease production and reduce the number of workers. D. increase production and reduce the number of workers.