The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B
B. recessionary; C
C. recessionary; A
D. expansionary; A
Answer: C
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The Compagnie Naturelle sells mounted butterflies, using butterfly bait it buys from another firm for $20,000. It pays its workers $35,000, pays $1000 in taxes, and has profits of $3000. What is its value added?
A) $3000 B) $19,000 C) $39,000 D) $59,000
A demand and supply analysis of protectionism shows that it is not just a matter of domestic gains and foreign losses, but a policy that imposes substantial domestic costs as well.
Select whether the statement is true or false. A. True B. False
Adam Smith's insight was that prices adjust to guide individual buyers and sellers to reach outcomes where, in many cases,
a. opportunity cost is minimized for buyers. b. scarcity is reduced for society. c. well-being of society is maximized. d. opportunity cost of production is maximized.
Contractionary fiscal policy _______________ Real GDP ______________ in an open economy than in a closed economy
A) raises; more B) raises; less C) lowers; more D) lowers; less