Activist fiscal policies:
A. usually produce budget deficits.
B. generally produce balanced budgets.
C. do not have any systematic effect on budget surpluses or deficits.
D. usually produce budget surpluses.
Answer: A
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Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C B. B; C C. B; A D. D; B
The above figure shows the production possibility frontier for a country. Suppose the country is producing at point A. What would be the opportunity cost to increase the production of rice to 12 tons?
A) 6 thousand bottles of wine B) 15 thousand bottles of wine C) 9 thousand bottles of wine D) 6 tons of rice E) Nothing, it is a free lunch.
Which of the following statements is correct?
a. When duopoly firms reach a Nash equilibrium, their combined level of output is the monopoly level of output. b. When oligopoly firms collude, they are behaving as a cartel. c. In an oligopoly, self-interest drives the market to the competitive outcome. d. An oligopoly is an example of monopolistic competition.
Regarding specialization, it is generally true that:
A. more specialization is always better. B. less specialization is always better. C. more specialization is always worse. D. specialization imposes costs as well as benefits.