The law of comparative advantage implies that a doctor who is also a talented auto mechanic should
A. get a part-time job at a gas station.
B. do his or her own auto repairs and those of his or her neighbors.
C. hire a professional mechanic to repair his or her car.
D. only repair the cars of other doctors.
Answer: C
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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
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
If the price of one input changes, the firm will change its use of that input only.
Answer the following statement true (T) or false (F)
If Miguel expects to earn a higher income next month, he may choose to
a. save more now and spend less of his current income on goods and services. b. save less now and spend more of his current income on goods and services. c. decrease his current demand for goods and services. d. move along his current demand curves for goods and services.