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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Trade restrictions like tariffs and quotas will
A) ensure that more dollars stay in the United States. B) protect American jobs and increase employment. C) reduce the value of goods and services that we will be able to produce and consume. D) make all Americans better off.
The monetary transmission mechanism that links monetary policy to GDP through real interest rates and investment spending is called the
A) traditional interest-rate channel. B) Tobins' q theory. C) wealth effects. D) cash flow channel.
In the long run, input demand becomes more
A) elastic. B) inelastic. C) unit-elastic. D) cost efficient.
If you believe that velocity is constant and that the aggregate supply curve is horizontal, then the quantity theory of money would predict that a doubling of the money supply would cause a doubling of the
a. price level and real output. b. price level. c. price level and no change in real output. d. real output.