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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The view that inappropriate monetary policy was the main reason for the depth of the Great Depression in the United States is most closely associated with
A. the monetarist view. B. the rational expectations theory. C. the mainstream view. D. the real business cycle theory.
________ will lead to an increase in the gross domestic product of a country, all other variables remaining constant
A) An increase in exports B) An increase in imports C) A fall in the expenditure incurred by the government D) A fall in the expenditure on investment goods
Refer to Figure 7.2. Which of the following statements is true?
A. The curve labeled A represents the APL.
B. Curves A and B represent short-run production functions.
C. The curve labeled A represents the MPL.
D. The curve labeled B represents the MPL.
If the demand curve for a product is vertical, then
A. consumers will refuse to bear any share of tax burden. B. producers will bear the larger share of the tax burden. C. consumers will bear the entire tax burden. D. producers and consumers will equally share the tax burden.