Assume that a GDP gap can be closed by a $200 initial change in planned spending. The MPS is 0.3 and the MPI equals 0.1 . If the economy is currently in equilibrium with an income level of $600, potential GDP equals:

In the above figure, what is the marginal cost of the 8th pizza?

A) $1.50 B) $12 C) $6 D) $96 E) 8 pizzas

If workers and firms lower their inflation expectations,

A) unemployment will rise. B) the short-run Phillips curve will shift downward. C) the short-run Phillips curve will be vertical. D) actual inflation will fall to match expected inflation.