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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According to the Laffer curve, a decrease in the tax rate may decrease tax revenues.
Answer the following statement true (T) or false (F)
A construction laborer might make more than a similarly skilled book store clerk because the working conditions in the book store are more desirable.
Answer the following statement true (T) or false (F)
An example of a public good is a flood control project that protects all the homes and properties near a river
a. True b. False Indicate whether the statement is true or false
Crowding out occurs when the government
a. reduces the level of the national debt, forcing up interest rates b. balances the budget, increasing the value of government bonds and thereby causing consumption to fall c. borrows money to finance the national debt, forcing up interest rates, causing private investment to fall d. borrows money to finance the national debt, causing interest rates to fall causing private investment to fall e. borrows money to finance the national debt, forcing up interest rates, causing consumption to fall