The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; A
B. recessionary; C
C. recessionary; B
D. expansionary; A
Answer: D
You might also like to view...
Of the three major economic questions, which of the following is the best example of a "What?" question?
A) Should we make faster microprocessors or pest-resistant corn? B) Should higher-income or lower-income people buy SUVs? C) What should doctors be paid? D) Should automobiles be produced using workers or robots? E) Should migrant workers or domestic workers be used to pick grapes?
An exchange rate arrangement with a free market determined floating exchange rate for capital account transactions and a fixed exchange rate for current account transactions is called
A) capital-current account exchange rate system. B) dual exchange rate system. C) managed exchange rate system. D) crawling peg exchange rate system.
Describe an asset price bubble and give examples. Explain why it is extremely difficult if not impossible for the Federal Reserve to prevent such bubbles
The money supply contracts when the Fed
A. replaces old worn-out notes and bills. B. borrows from the Treasury. C. sells government securities. D. purchases stocks from corporate businesses.