When the Federal Open Market Committee buys government securities:
a. the reserve requirement of banks decrease.
b. the reserve deposits of banks decrease.
c. the excess reserves of banks increase.
d. the federal funds rate increases.
e. the legal reserves of banks decrease.
c
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The long-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the economy is
A) in expansion. B) at full inflation. C) away from potential GDP. D) in recession. E) at full employment.
The figure above illustrates the problem of overcrowding and external costs experienced during the summer months in the state park. The competitive equilibrium is at
A) point G. B) point H. C) point I. D) point J.
Governments are most likely to adopt trade restrictions because
a) of nationalistic motives and prejudice against other countries b) protectionist policies benefit society as a whole c) tariffs are the primary source of government revenue d) those whom trade hurts are more cohesive and vocal than those whom trade benefits e) trade weakens the government’s ability to conduct stabilization policy
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