The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B
B. recessionary; C
C. recessionary; A
D. expansionary; A
Answer: C
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The income effect of a price change results in a
A) movement along the demand curve due to a change in relative prices. B) shift of the demand curve when income changes. C) shift of the demand curve due to a change in purchasing power brought about by the price change. D) movement along the demand curve due to a change in purchasing power brought about by the price change.
In 2013, XYZ Corporation had total earnings of $500 million and XYZ retained 20 percent of its earnings for future investments. If the price of a share of XYZ stock is $70 and if 100 million shares of its stock is outstanding, then what is the price-earnings ratio?
a. 6.25 b. 11.2 c. 14.0 d. 17.5
Suppose the real wage of a worker remains unchanged between Year 1 and Year 2 but the nominal wage decreases from $20 in Year 1 to $18 in Year 2. This implies that the price level has _____
Fill in the blank(s) with the appropriate word(s).
Refer to the diagram, where T is tax revenues and G is government expenditures. All figures are in billions of dollars. If the full-employment GDP is $400 billion while the actual GDP is $200 billion, the:
A. actual budget deficit exceeds the cyclically adjusted budget deficit.
B. actual budget deficit is less than the cyclically adjusted budget deficit.
C. cyclically adjusted deficit exceeds the cyclical deficit.
D. cyclical deficit exceeds the cyclically adjusted deficit.