Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C
B. B; C
C. B; A
D. D; B
Answer: D
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The real exchange rate is:
A) how much of a foreign currency you can buy with the domestic currency. B) foreign CPI divided by the domestic CPI. C) the price of foreign goods in terms of domestic goods. D) the price of foreign goods in dollars. E) the domestic currency divided by the price level.
If your nominal income in 2014 was $50,000, and prices doubled between 2014 and 2017, to have the same real income, your nominal income in 2017 must be
A) $50,000. B) $75,000. C) $90,000. D) $100,000.
Greg spends his entire budget on two goods: he plays video games at the mall arcade and he buys pizza. He discovers that his MU/P of video games is lower than his MU/P of pizza. From this, we know that he would be:
a. happier eating less pizza and playing fewer video games. b. happier eating less pizza and playing more video games. c. happier eating more pizza and playing fewer video games. d. indifferent to which selection he makes. e. as happy as possible, since he is already maximizing total utility.
Wages in the United States are higher than wages in China primarily because
a. worker productivity is higher in the United States. b. in the United States, less capital is required per employee. c. China has more natural resources that employees can work with. d. the United States has more people and, therefore, a larger number of skilled workers.