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

A. recessionary; A
B. recessionary; C
C. recessionary; B
D. expansionary; A

Answer: D

Economics

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A purely monopolistic firm:

A. has no entry barriers. B. faces a downsloping demand curve. C. produces a product or service for which there are many close substitutes. D. earns only a normal profit in the long run.

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