The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A
B. recessionary; C
C. recessionary; B
D. expansionary; A
Answer: D
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Which of the following statements is true?
A) An optimizing individual is also likely to exhibit rationality. B) Optimization requires individuals to foresee the future perfectly. C) The less information that is available, the easier it is to make optimal decisions. D) An optimizing individual need not consider the risks involved in various choices.
An increase in the price of MP3 players will result in
A) a smaller quantity of MP3 players supplied. B) an increase in the supply of MP3 players. C) a decrease in the demand for MP3 players. D) a larger quantity of MP3 players supplied.
If the desired fiscal stimulus is $20 billion and the desired AD increase is $50 billion, we can conclude that
A. There is an inflationary gap. B. The MPC is 0.60. C. The multiplier is 2.0. D. The MPS is 0.60.
Advertising can influence demand by altering tastes of consumers. This type of advertising is known as
A. strategic advertising. B. persuasive advertising. C. influential advertising. D. informative advertising.