The trough of a business cycle occurs when ________ hits its lowest point.
A. the money supply
B. aggregate economic activity
C. the unemployment rate
D. inflation
Answer: B
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When the actual inflation rate turns out to be greater than the expected inflation rate, who gains — the borrower or the lender — and who loses? Explain why
What will be an ideal response?
Refer to Figure 14.2. Other things equal, a decrease in inflationary expectations would best be represented by a movement from
A) point A to point B. B) point B to point A. C) point C to point B. D) point B to point C.
The concept of vertical equity is that
a. income should be taxed instead of property. b. property should be taxed instead of income. c. there should be little movement up or down the social scale. d. persons who are unequal should be treated unequally.
Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary