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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In a "liquidity trap,"
A) the demand for money is infinite. B) the LM curve is a vertical line. C) the nominal interest rate on short-term assets is relatively high. D) money supply changes have a strong impact on interest rates.
Regulation is guaranteed to be more efficient than a monopoly
A) True, the government is able to internalize the dead weight loss of the monopoly. B) True, the consumers are better off if government provides the product rather than a private firm. C) False, the government does not always have sufficient information to provide a more efficient market outcome. D) False, the consumers are worse off under government regulation.
Mercosur is a trade agreement between nations
A) in Southeast Asia. B) in South America. C) in South Africa. D) in Southern Europe.
You have won a lottery prize that promises to pay you and your descendants $1,000 a year forever. If the lowest price you are willing to sell this perpetuity for is $20,000, then you must be assuming that the relevant interest rate is
a. 5% b. 10% c. 15% d. 20%