In an economy where planned aggregate spending is given by PAE = 3,000 + .75Y ? 10,000r, the central bank is currently setting the interest rate at 0.06 (6 percent). If potential output equals 9,500, the central bank must ________ the interest rate to close the ________ gap.
A. lower; recessionary
B. lower; expansionary
C. raise; expansionary
D. raise; recessionary
Answer: C
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Based on the figure below. An economy is currently in long-run equilibrium at point B, at an inflation rate of ?', which is too high for to sustain economic growth. If an anti-inflationary policy is enacted, the economy will be in short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________. 
A. B; C B. A; C C. B; A D. A; B
A good that would be counted as consumption in GDP would be the:
A. Subway sandwich Tony ate for lunch. B. $10 Tony received after winning a bet with his friend. C. $50 in wages Tony received that day from working all afternoon. D. common stock Tony purchased for his 401(k).
In a sequential game
A) players try to figure out an opponent's future response in making their own moves. B) all players make decisions at the same time. C) players draw lots and take turns. D) players figure out their own moves and then forecast their following moves.
The second step of the four step process is to
a. identify the new equilibrium and then compare the original equilibrium price and quantity to the new equilibrium price and quantity. b. decide whether the economic change being analyzed affects demand or supply. c. draw a demand and supply model before the economic change took place. d. decide whether the effect on demand or supply causes the curve to shift to the right or to the left, and sketch the new demand or supply curve on the diagram.