An increase in the discount rate ________ bank reserves and ________ the money supply if banks respond appropriately to the change in the rate.
A) increases; decreases
B) decreases; decreases
C) decreases; increases
D) increases; increases
Ans: B) decreases; decreases
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Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 
A. Rising; A B. Falling; A; C C. Falling; B: C D. Rising; A; C
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Maxine's Cookie Shop sells chocolate chip cookies in a perfectly competitive market for $2 per dozen. Maxine currently produces 200 dozen cookies per day and average total cost at this level of production is $1.75
What level of profit is this firm earning? Explain.
Fee-for-service insurance
A. requires you pay for services before they are performed. B. allows patients to pick their own doctor. C. is typically less expensive than an HMO covering the same illnesses. D. has more meddlesome bureaucrats than an HMO.