The 2007 subprime crisis spread easily because
A) the United States is an important economy.
B) banks in other countries had purchased assets that depended on the U.S. housing market.
C) there was speculation against the U.S. dollar.
D) the Fed failed to act at the right time.
B
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
Higher resource costs shift the
A) long-run aggregate supply curve leftward, decreasing real GDP and increasing potential GDP. B) short-run aggregate supply curve leftward, raising the price level and decreasing potential GDP. C) short-run aggregate supply curve leftward, raising the price level and decreasing real GDP so it is less than potential GDP. D) short-run aggregate supply curve rightward, raising the price level and decreasing real GDP so it is less than potential GDP.
Adam Smith believed that if people were free to pursue their own interests,
A) less would be produced than if government planners were in charge of the economy. B) they would generally apply their talents to unproductive activities that would generate little value to society. C) they would have little incentive to undertake productive activities. D) the public interest would be served quite well.
Use the table below to answer the next question for a perfectly competitive firm. OutputTotal RevenueTotal Cost0$0$501407428094312011741601425200172The market price of the product in the short run is
A. $40. B. $160. C. $80. D. $120.