To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:

A deadweight loss occurs whenever

A) the total benefit of a good does not equal its total cost. B) the marginal social benefit of a good does not equal its marginal social cost. C) there is perfect price discrimination. D) there is no consumer surplus.

As wages rise, the substitution effect induces households to

A) choose leisure rather than supplying labor in the labor market. B) choose supplying labor in the labor market rather than engage in leisure. C) reduce the opportunity cost of leisure. D) reduce the economic rent from leisure.