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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If marginal benefit is greater than marginal cost for the production of cars, to reach the allocative efficient quantity of cars, the production of cars must be increased
Indicate whether the statement is true or false
Recessions are identified by
a. severe and long-lasting phases of decreased output b. high employment c. constant output d. decreasing output e. low unemployment
When a firm's fixed costs increase it should raise its prices in order to maximize profits
a. True b. False Indicate whether the statement is true or false
What happens to real money demand (rise, fall, no change) due to a change in each of the following factors?(a)A tax on stock market transactions is introduced.(b)Computerized bond trading reduces transactions costs.(c)People's average level of wealth rises.(d)The threat of a recession increases the riskiness of stocks and bonds.(e)The interest rate paid on checking account balances declines.(f)The price level falls in a one-time jump.
What will be an ideal response?