Of the four models of the business cycle, which model's implication concerning the change in real wages during recessions is consistent with actual observed changes in real wages during recessions?
A) the Real Business Cycle theory
B) the Friedman-Phelps-Lucas Model
C) the Keynesian Model
D) None of the above.
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 illustrates a firm's total revenue and total cost curves. Which one of the following statements is FALSE?
A) Economic profit is the vertical distance between the total revenue curve and the total cost curve. B) At output Q1 the firm makes zero economic profit. C) At an output above Q3 the firm incurs an economic loss. D) At output Q2 the firm incurs an economic loss.
Some economists argue that well-functioning capital markets that allow funds to move from those who have but do not need funds to those who need but do not have funds, are essential for rapid economic growth. Well-functioning capital markets are an example of:
A. entrepreneurship. B. growth-compatible institutions. C. physical capital. D. human capital.
Assuming demand is a straight line, the equation of the inverse demand curve is represented as
A. P = a - bQd. B. Q = a - bPd. C. P - Qd = a + b. D. Qd = a + bP.