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
You might also like to view...
Which of the following about economic freedom is true?
a. In 1960, the per capita income levels of Hong Kong and Singapore were greater than those of the United States and Canada. b. The economies of Hong Kong and Singapore have grown slowly in recent decades. c. Economic freedom ratings indicate that both Hong Kong and Singapore rank among the world's freest economies. d. Economic freedom ratings indicate that Nigeria and Venezuela rank among the world's freest economies.
Which of the following would a permanent increase in the growth rate of the money supply change permanently?
a. inflation b. unemployment c. both inflation and unemployment d. neither inflation nor unemployment
Holding all else constant, an increase in Mexican real GDP will ________ the demand for dollars in the foreign exchange market and ________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. increase; decrease B. decrease; increase C. increase; increase D. decrease; decrease
The idea behind the “Big Mac index” is a test of
A. interest rate parity theory. B. long-run equilibrium theory. C. purchasing power parity theory. D. exchange rate equalization theory.