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
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What agreement has been reached to reduce the moral hazard problem and what does it require?
What will be an ideal response?
Which of the following is an equilibrium condition of the short-run macro model?
a. Taxes equal transfers. b. Imports equal exports. c. Aggregate expenditure equals output. d. Consumption spending equals autonomous consumption spending. e. Consumption spending equals investment spending plus government spending.
Which of the following statements about cost curves is always true?
a. ATC decreases as output increases. b. AFC increases as output increases. c. AFC lies above AVC. d. ATC lies above AVC. e. MC lies below ATC.
As air is a _____, pollution tends to occur
a. common resource b. private good c. club good d. merit good