Based on the diagram, if potential output equals 5,000 and the real interest rate is 1 percent, then there is ________ gap and the Fed must ________ the real interest rate so that output will equal potential output. 
A. an expansionary; raise
B. an expansionary; reduce
C. a recessionary; raise
D. a recessionary; reduce
Answer: A
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Cyrus McCormick and Eli Whitney were important in the technology of
A. steel. B. automobiles. C. agriculture. D. oil.
The break-even point on the consumption function represents the point where
A) consumption is zero. B) income equals consumption plus spending. C) consumption equals spending. D) consumption equals income.
The figure above shows a production possibilities frontier. In the figure, when the economy moves from point E to point D, what is the opportunity cost of a DVD?
A) 0.25 cell phones B) 0.5 cell phones C) 1 cell phone D) 4 cell phones E) zero
Assume the demand function for good X can be written as Qd = 80 - 3Px + 2Py + 10I, where Px = the price of X, Py = the price of good Y, and I = Consumer income. According to this equation:
A) a rise in the price of Y would cause the demand for X to decrease. B) X and Y are complements C) X is an inferior good. D) X and Y are substitutes.