Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher
B. expansionary; higher; potential
C. recessionary; higher; potential
D. recessionary; lower; lower
Answer: B
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Real GDP does not show the state of economic welfare in a country in part because GDP omits
I. household production. II. leisure time available. III. the quality of the environment. A) I only B) I and III C) II and III D) I, II and III
Which of the following would not be true of a competitive labor market?
A. Wages would be determined by supply and demand. B. The demand curve for labor would be derived like the demand curve for any other input. C. The demand curve for labor would be the downward-sloping portion of the MRP curve. D. Labor supply would be determined by the marginal revenue product curve.
Suppose the cost function is C(Q) = 50 + Q ? 10Q2 + 2Q3. At 3 units of output, the marginal cost curve is:
A. in the declining stage. B. at the maximum level. C. in the increasing stage. D. at the minimum level.
Refer to the figure below where the nominal interest rate equals 6% and the money supply equals 600. If the Federal Reserve wants to set the nominal interest rate at 10%, it must conduct open market ________ to set the money supply at ________. 
A. sales; 200 B. sales; 800 C. purchases; 800 D. purchases; 200