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
Answer: C
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The short-run aggregate supply curve (SRAS) is the amount of real GDP:
a. produced at various price levels. b. produced at various savings rate levels. c. purchased at various price levels. d. purchased at various saving rate levels.
The development of pay-per-view technology:
A. converted a collective good into a private good. B. has made all consumers worse off. C. allows consumers to see movies that were previously unavailable for several years. D. converted a pure public good into a collective good.
Suppose a consumption function is given as C = $150 + 0.75YD. The marginal propensity to save is
A. 0.75. B. 150. C. -0.75. D. 0.25.
Suppose all of the banks in the Federal Reserve System have $100 billion in transactions accounts, the required reserve ratio is 0.25, and there are no excess reserves in the system. If the required reserve ratio is changed to 0.20, the total lending capacity of the system is increased by
A. $750 million. B. $25 billion. C. $10 billion. D. $20 billion.