If the market supply curve does not capture all of the costs to society of producing an additional unit of good, then:
A. the allocation of resources will be efficient.
B. the market equilibrium will be socially optimal.
C. the market equilibrium will not be efficient.
D. the market will not be in equilibrium.
Answer: C
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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
The difference between money and income is that
A) money is a flow and income is a stock. B) money is a stock and income is a flow. C) there is no difference—money and income are both stocks. D) there is no difference—money and income are both flows.
When consumption and leisure are both normal goods, after an increase in real dividend income minus taxation, the rational consumer
A) increases consumption and increases leisure. B) increases consumption and reduces leisure. C) reduces consumption and increases leisure. D) reduces consumption and reduces leisure.
When a check is drawn against bank A and deposited in another bank, the first bank loses reserves as the check is cleared. Yet the check collection involves no loss of reserves by the banking system. Explain what significance this has for the lending ability of the system as a whole.
What will be an ideal response?