The "stagflation" of the 1970s ________ Keynesian macroeconomics until the Keynesians started to build the consequences of changing inflationary expectations and ________ shocks into their models

When real GDP exceeds potential GDP, then the economy has

A) an inflationary gap. B) a below-full-employment equilibrium. C) a recessionary gap. D) None of the above answers are correct.

If there are low barriers to entry, a monopolist

A) might undertake investment to lower marginal cost in the face of a potential rival. B) will undertake investment to lower marginal cost in order to increase profits. C) will not undertake investment to lower marginal cost under any circumstances because profits are lower. D) Both A and B.