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 more money an average household spends on one specific type of good or service per month, the
A) smaller the relative importance of that item in the CPI market basket. B) larger the relative importance of that item in the CPI market basket. C) costlier it will be to conduct the Consumer Expenditure Survey. D) less significant an increase in the price of that good or service will be for the household. E) more frequently its price is checked when calculating the CPI.
Comparative advantage is based on opportunity costs
a. True b. False
A demand curve reflects each of the following except the
a. willingness to pay of all buyers in the market. b. value each buyer in the market places on the good. c. highest price buyers are willing to pay for each quantity. d. ability of buyers to obtain the quantity they desire.
Initially, the economy is in long-run equilibrium. Aggregate demand then shifts leftward by $50 billion. The government wants to increase its spending in order to avoid a recession. If the crowding-out effect is always one-third as strong as the
multiplier effect, and if the MPC equals 0.6, then by how much do government purchases have to increase in order to offset the $50 billion leftward shift? a. by $90 billion b. by $60 billion c. by $20 billion d. by $30 billion