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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If Countries A and B produce only either rubber bands or paper clips, their maximum outputs are shown in the production possibilities schedules below.CountryRubber BandsPaper ClipsA4080B1040In country A the opportunity cost of 1 paper clip is
A. 1/2 rubber band. B. 2 rubber bands. C. 1/4 rubber band. D. 1 rubber band.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y2. C. P3 and Y1. D. P2 and Y3.
When each bidder in an auction knows what the item is worth to that bidder, but does not know the valuations of other bidders, the auction exhibits:
A. partially private values. B. private values. C. perfect information. D. common values.
With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will:
A. increase equilibrium price and quantity if the product is a normal good. B. decrease equilibrium price and quantity if the product is a normal good. C. have no effect on equilibrium price and quantity. D. reduce the quantity demanded but not shift the demand curve.