Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary
B. B; no output
C. B; expansionary
D. A; a recessionary
Answer: A
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If the U.S. government decides to increase military spending, a possible opportunity cost could be lower spending on education.
Answer the following statement true (T) or false (F)
The profit-maximizing firm should lay off workers when: a. MRC < MRP
b. MRC > MRP. c. MRC = MRP. d. the MP of labor begins to diminish.
According to Regulation Q, the maximum interest rate that the U.S. banks could pay on deposits was limited by the Federal Reserve. This reduced volatility in the financial markets and largely benefited the U.S. banks
a. True b. False Indicate whether the statement is true or false
The exchange rate is
a. another term for "interest rate." b. another term for "growth rate." c. the rate at which goods trade for one another across international borders. d. the price of one currency in terms of another currency.