In the short run in the Keynesian model, a sharp increase in oil prices would leave the economy with a ________ level of output and a ________ real interest rate.
A. higher; lower
B. lower; higher
C. lower; lower
D. higher; higher
Answer: B
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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
According to New Keynesians, an increase in which of the following will tend to cause the inflation rate to increase?
A) firms' average inflation adjusted per-unit costs of production B) anticipated future inflation C) an unexpected increase in aggregate demand D) all of the above
A simple economic model predicts that a fall in the price of bus tickets means that more people will take the bus. However, you observe that some people still do not take the bus even after the price of a ticket fell
a. Is the model incorrect? b. How would you test this model?
In the long run, firms in a monopolistically competitive market operate:
A. at lowest average total costs possible. B. at full capacity. C. at less than full capacity. D. on an efficient scale.