A merger between two firms that have a supplier-purchaser relationship is:
a. horizontal.
b. vertical.
c. conglomerate.
d. illegal.
e. inefficient.
b
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Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C B. B; C C. B; A D. D; B
Suppose a firm has the following total cost function: TC = 100 + 4q2. What is the minimum price necessary for the firm to earn profit? Below what price will the firm shut down in the short run?
What will be an ideal response?
In the short run, there are large and persistent deviations between actual exchange rates and exchange rates predicted using purchasing power parity because of:
a. Central bank intervention in the foreign exchange market and sticky prices. b. Discretionary monetary policy. c. Discretionary fiscal policy. d. Widely different inflation rates in the two nations. e. All of the above.
Refer to the above graph. What combination would most likely cause a shift from AD 1 to AD 3?
An increase in taxes and an increase in government spending A decrease in taxes and a decrease in government spending An increase in taxes and a decrease in government spending A decrease in taxes and an increase in government spending