Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward
B. Short-run aggregate supply shifting upward
C. Short-run aggregate supply shifting downward
D. Aggregate demand shifting leftward
Answer: B
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According to The Economist magazine's Big Mac index, one of the most overvalued currencies as of July 2008 was the Norwegian kroner. Which of the following is a likely implication of that fact?
A) That goods and services are more expensive in Norway than in the U.S. B) That the Norwegian currency is going to be undervalued in the near future. C) That the Norwegian currency is likely to appreciate in the near future. D) That the Norwegian government is running a large deficit.
In Figure 3-7 above, a $250 increase in AP causes
A) Y to increase by $1250. B) induced saving to increase by $250. C) consumption to increase by $1000. D) all of the above.
Compared to earlier times, the period of the 1950s to the early 1960s was one characterized by
(a) temporary deficit spending of the government. (b) permanent deficit spending of the government. (c) temporary surplus spending of the government. (d) permanent surplus spending of the government.
Discuss the key criteria for success and the advantages of a central bank adopting the framework of inflation targeting.
What will be an ideal response?