Leveraging investments based on irrational expectations:
A. can lead to gradually deflating financial bubbles.
B. is cited as a root cause of financial crises.
C. explains the success of companies like Apple.
D. All of these statements are true.
B. is cited as a root cause of financial crises.
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If the Fed wants to move the economy down and to the right along the Phillips curve, what must it do?
a. Increase the rate at which the aggregate supply curve shifts upward b. Decrease the rate at which the aggregate demand curve shifts rightward c. Increase the rate at which the aggregate demand curve shifts rightward d. Increase the rate at which the aggregate demand curve shifts leftward e. Decrease the rate at which the aggregate supply curve shifts upward
This graph below shows a consumer facing a choice between a cash gift and merchandise of greater value. 
Show, using a sketch graph, why a consumer prefers a cash gift rather than a larger gift of merchandise.
What will be an ideal response?
We would expect the aggregate demand curve to be
A. Vertical. B. Horizontal. C. Upward sloping. D. Downward sloping.
Suppose that it would cost a firm $9 million to develop a new drug. In the absence of a patent, other firms will be able to copy and bring to market a generic equivalent of the drug in three years. In each of these three years, the firm would earn monopoly profits of $4 million. A patent will generate monopoly status for the firm for twenty years. If the government knew this information ahead of time, which of the following is most correct?
A. The government should grant a patent to the firm, because the firm would not produce the drug at all without a patent. B. The government should grant a patent to the firm, because it does not have the resources to determine on a case-by-case basis exactly which inventions merit award of the patent. C. The government should grant a patent to the firm, because even with a patent the firm will not earn a monopoly profits. D. The government should not grant a patent to the firm, because the firm would earn sufficient profits to develop the drug without the patent.