Which of the following is an example of risk diversification?
A) an individual purchasing only IBM stock
B) an insurance company writing earthquake insurance only for the Los Angeles area
C) an individual investing all of her savings in a single, new firm
D) a lumber mill purchasing trees from various forests across the western United States
D
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Which of the following is true of cyclical unemployment?
A) Cyclical unemployment increases during periods of economic boom. B) Cyclical unemployment is the deviation of unemployment from its natural rate. C) Cyclical unemployment is also known as frictional unemployment. D) Cyclical unemployment decreases during periods of economic boom.
Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary