The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A
B. recessionary; C
C. recessionary; B
D. expansionary; A
Answer: D
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The people who immediately benefit from a minimum wage are
A) employers who now pay the minimum wage. B) those people who enter the labor force to search for minimum wage jobs. C) the workers who retain their jobs after enactment of the minimum wage. D) everyone, both demanders and suppliers, because the minimum wage benefits everyone. E) all workers.
The Chapter 3 multiplier, because it assumes an ________ interest rate, is usually an ________ of the fiscal policy multiplier in the IS-LM model
A) endogenous, underestimate B) endogenous, overestimate C) exogenous, underestimate D) exogenous, overestimate
From an initial steady state, suppose a government policy increases the national saving rate, causing the capital stock to start growing faster than the population. With (K/N) now rising, the Solow growth model goes on to say that (Y/N)
A) will rise only so far, to where the increased requirement for new capital matches the increased saving. B) will rise only temporarily, so long as the population growth rate remains constant. C) will rise and keep on rising, so long as the national saving rate exceeds the population growth rate. D) never does rise, since the government's policy does not affect either the population growth rate or the depreciation rate.
If a major league baseball player would be willing to work for $500,000 per year and is currently being paid $1,200,000 per year, the opportunity cost of his decision to play baseball is
A. $1,700,000. B. $500,000. C. $700,000. D. $1,200,000.