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

Suppose a person's utility for leisure (L) and consumption (Y) can be expressed as U = Y ? L and this person has no non-labor income. Assuming a wage rate of $10 per hour, show what happens to the person's labor supply when the person wins a lottery prize of $100 per day

What will be an ideal response?

Which of the following increases the effectiveness of monetary policy from a monetarist perspective?

A. Changing expectations. B. Unresponsive investment demands. C. The liquidity trap. D. The constant velocity of money.