Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:

In the market for automobile insurance, adverse selection implies that

A) those who are insured might take greater risks. B) those who are uninsured might take greater risks. C) insured and uninsured alike will take greater risks. D) drivers with greater risks are more likely to buy insurance.

You lend $5,000 to a friend for one year at a nominal interest rate of 10%. Inflation during that year is 5%. As a result, you will receive ________ at the end of the year, but that money has a purchasing power of ________

A) $5,050; $5,025 B) $5,100; $5,050 C) $5,500; $5,250 D) $6,000; $5,500