The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________.  

Over the Fed's history, it has targeted

a. bank reserves. b. the Federal funds rate. c. monetary aggregates. d. inflation. e. all but d.

An incumbent's threat to retaliate after a potential competitor enters the market will be taken seriously by potential competitors if

A) the incumbent can still earn a profit after carrying out the threat. B) the incumbent earns greater profit carrying out the threat than by accommodating entry. C) the potential entrant cannot earn a profit if the threat is carried out. D) the potential entrant's profit exceeds the incumbent's if the threat is carried out.