Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.

Banks are able to create money only when

a. interest rates are above 2%. b. the Fed sells U.S. government bonds. c. the reserve ratio is 100%. d. only a fraction of deposits are held in reserve.

What two factors are the keys to determining labor productivity?

A) the business cycle and the growth rate of real GDP B) the growth rate of real GDP and the interest rate C) the level of technology and the quantity of capital per hour worked D) the average level of education of the workforce and the price level