If the marginal benefits are greater than the marginal cost of an activity, then society is overallocating resources to this activity.
Answer the following statement true (T) or false (F)
False
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Use the figure below to answer the following question. 
At equilibrium, economic surplus is represented by the area
A. b + c. B. b. C. a. D. a + b.
The potential level of real GDP is the level of output a society can achieve when labor is employed at its natural level.
a. true b. false
Refer to the four graphs below. Select the graph above that best shows the changes in demand and supply in the market specified in the following situation: In the market for music CDs sold in stores, if more consumers switch to music-downloads from the
Internet, and the cost of making music CDs decreases because of technological improvement in production.
A. Graph A
B. Graph B
C. Graph C
D. Graph D