Describe what happens to the FE line if government purchases increase
What will be an ideal response?
In the classical model of the labor market, the rise in government purchases reduces people's perceived wealth, so they increase their labor supply. The increase in labor supply results in a new labor market equilibrium with increased employment and a lower real wage. The higher level of employment shifts the FE line to the right.
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
The behavior of exchange rates has very little to do with the values used in financial statements
Indicate whether the statement is true or false
Where Y is GDP, C is consumption, I is investment, G is government spending, and there is no international trade, national saving equals:
A. Y + C + G. B. C + I + G. C. Y - C - G. D. Y - C - I.
Figure 10.6 shows prices, demands, and cost data for the only restaurant in a small town. If the restaurant charges the single price of $8 per meal, what is its profit from non-senior customers?
A. $1,200 B. $1,500 C. $2,280 D. $2,560