(I) Historically, countries with colonial settlers who planned on staying for long periods of time set up sound economic institutions. (II) Countries with harsh environments not suitable for permanent settlements resulted in colonial settlers adopting weaker and less productive economic institutions before leaving

When the unemployment rate is less than the natural unemployment rate

A) the output gap is positive. B) the output gap equals zero. C) the output gap is negative. D) None of the above is possible because it is impossible for the unemployment rate to be less than the natural rate.

Is a monopolistically competitive firm productively efficient?

A) Yes, because it produces where marginal cost equals marginal revenue. B) No, because price is greater than marginal cost. C) No, because it does not produce at minimum average total cost. D) Yes, because price equals average total cost.