1.What is the level of unemployment that is natural to an economy, such that attempts to reduce unemployment below this level will be inflationary?

A.Recessionary Gap or GDP Gap or Output Gap

B.Natural Rate of Unemployment

C.The Phillips Rate of Unemployment

D.Potential GDP

2.If taxation is increased close to the peak of a business cycle in the hopes of "cooling" the economy, how will equilibrium GDP and the general price level change?

A.Equilibrium GDP will rise and so will the general price level

B.Equilibrium GDP will fall and so will the general price level

C.Equilibrium GDP will rise but the general price level will fall

D.Equilibrium GDP will fall and the general price level will rise

3.What is the mechanism by which government expenditure increases GDP during a recession?

A.Government expenditure shifts the demand curve to the right, increasing GDP and the general price level

B.Government expenditure shifts the demand curve to the left, increasing GDP but lowering the general price level

C.Government expenditure shifts the supply curve to the right, increasing GDP and lowering the general price level

D.Government expenditure shifts the supply curve to the left, increasing both GDP and the general price level