Suppose that, in the short run, a perfectly competitive firm earns a normal profit. Which of the following is incorrect?

The figure above illustrates a small country's production possibilities frontier. Based on the figure, we can tell that the nation's resources are

A) not equally productive in all tasks because the production possibilities frontier is bowed out. B) unlimited because the slope is negative and the PPF is bowed out. C) equally productive in all tasks because the slope is negative. D) not equally productive in all tasks because the slope is negative. E) equally productive in all tasks because the production possibilities frontier is bowed out.

Which of these changes is observed in an economy when a recessionary gap is closed in the long run?

a. An increase in the inflation rate and a decrease in the unemployment rate b. An increase in the level of output and a decrease in the price level c. An increase in both the rate of output and the price level d. A decrease in both the rate of output and the price level e. A decrease in the inflation rate and an increase in the unemployment rate