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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An example of a market subject to adverse selection would be:
A. the video game market. B. the new appliance market. C. the used car market. D. uniform commodity markets like crude oil.
The consumption function shows the relationship between
a. planned consumption expenditures and disposable income. b. permanent income and savings. c. business inventory and real GDP. d. aggregate demand and aggregate consumption.
An economist would be more likely to argue against reducing inflation if she thought that
a. the central bank lacked credibility and if bonds were usually not indexed for inflation. b. the central bank lacked credibility and if bonds were usually indexed for inflation. c. the central bank had credibility and if bonds were usually not indexed for inflation. d. the central bank had credibility and if bonds were usually indexed for inflation.
Competitive firms are price takers largely because of intensive advertising by their competitors.
Answer the following statement true (T) or false (F)