The economy’s self-correcting mechanism
A. tends to push unemployment toward a specific point called the natural rate of unemployment.
B. works better at correcting inflationary gaps than recessionary gaps.
C. cannot work if the Phillips curve is vertical.
D. ensures that the economy will not have to endure a long period of high unemployment.
Answer: A
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Price ceilings cause
a. Some suppliers to drop out of the market as they cannot charge the price they were earlier charging b. A reduction in the quality of the product c. The creation of black markets d. All the above
How can government policy stimulate economic growth?
a. increasing spending on Social Security payments b. decreasing spending on research and development forcing it to be more efficient c. increasing research and development of new technology d. decreasing spending to end the budget deficit
The multiple by which the commercial banking system can increase the supply of money on the basis of each dollar of excess reserves is equal to:
A. the reciprocal of the legal reserve ratio. B. the reciprocal of the velocity of money. C. 1 minus the legal reserve ratio. D. marginal propensity to save.
Refer to the information provided in Figure 15.5 below to answer the question(s) that follow. 
Figure 15.5 Refer to Figure 15.5. Assume the Custom Sweater Shop has fixed costs of $500 and is a monopolistically competitive firm. To maximize profits in the short run, this firm should set a price of
A. $36. B. $44. C. $46. D. $50.