A sometimes short, sometimes extended period of declining output and living standards is referred to as a recession.

If Armenia can produce two rugs or 100 spy novels in an hour, and Turkey can produce one rug or 50 spy novels in an hour,

a. the terms of trade are 50 spy novels per rug, and Turkey should produce both rugs and spy novels b. the terms of trade are 50 spy novels per rug, and Turkey should produce only rugs c. the terms of trade are 50 spy novels per rug, and Armenia should produce only rugs d. there are no gains from trade e. the terms of trade are will exceed 50 spy novels per rug, and Armenia should produce both rugs and spy novels

If policy makers do nothing in response to a recessionary gap, what will happen?

a. a rapid movement toward lower unemployment and higher inflation b. a rapid movement toward lower unemployment and lower inflation c. a slow movement toward lower unemployment and higher inflation d. a slow movement toward lower unemployment and lower inflation