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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If both supply and demand decrease by the same amount, the equilibrium price
A) does not change. B) rises. C) falls. D) cannot be predicted. E) None of the answers is correct because the price depends on what happens to the equilibrium quantity.
Figure 10-2
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Figure 10-2 shows demand and short-run cost curves for a perfectly competitive firm. In the short run, this firm would
A. earn positive economic profits. B. earn economic losses. C. go out of business. D. Cannot be determined with the information given.
Supporters of raising the minimum wage argue that minimum-wage laws are
a. a tax-free way to help the working poor. Businesses bear the burden of paying higher wages, not the government. b. better than the Earned Income Tax Credit (EITC) in targeting the working poor. The EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage. c. better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol. d. a way to increase employment of those likely to earn the minimum wage.
Social Security checks began to be issued in:
A. 1955. B. 1929. C. 1940. D. 1930.