Figure 4-9
Moonshine" is illegal home brew made by adding sugar to accelerate corn fermentation. Ten pounds of sugar are necessary to make a gallon of moonshine. In the mid-1970s, the price of sugar tripled and the price of moonshine skyrocketed from $6 to $15 a gallon. Which graph in Figure 4-9 best illustrates this?
a.
1
b.
2
c.
3
d.
4
d
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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
What is the role of the Federal Deposit Insurance Corporation?
a. To insure bank deposits b. To act as a lender of last resort c. To establish regulations for commercial banks d. To monitor the actions of commercial banks e. To insure the assets of commercial banks
Financial intermediaries are
a. the same as financial markets. b. individuals who make profits by buying a stock low and selling it high. c. a more general name for financial assets such as stocks, bonds, and checking accounts. d. financial institutions through which savers can indirectly provide funds to borrowers.
Three of these are a condition for perfect competition.
a. Many buyers and sellers participate in the market. b. Sellers offer a wide variety of products. c. Buyers and sellers are well informed about products. d. Sellers are able to enter and exit the market freely.