Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward
B. Short-run aggregate supply shifting upward
C. Short-run aggregate supply shifting downward
D. Aggregate demand shifting leftward
Answer: B
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The money supply is certain to increase if the Treasury finances expenditures by borrowing from the
A) Federal Reserve. B) banking system. C) non-bank financial system. D) general public.
Three firms that are successful in colluding to raise their prices must
a. lose profits b. announce any price changes to the government c. restrict output d. increase advertising to earn a profit e. expand production
The economy pictured in the given figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________.
A. recessionary; B B. recessionary; C C. expansionary; A D. recessionary; A
Refer to the graph below. Assume that the economy is initially in equilibrium at the intersection of AD1 and AS1. Suppose that there is economic growth which shifts AS1 to AS2. If the application of a monetary rule is designed to shift AD1 to AD3, but because of pessimistic business expectations AD1 only shifts to AD2, then mainstream economists would suggest that the actions to be taken to avoid deflation would be to implement a(n):
A. Expansionary fiscal policy and a tight money policy
B. Contractionary fiscal policy and a tight money policy
C. Expansionary fiscal policy and an easy money policy
D. Contractionary fiscal policy and an easy money policy