The U.S. dollar appreciates against the euro. What is the impact on aggregate expenditures and income? A) Both increase. B) Both decrease. C) Aggregate expenditure increases and income decreases. D) Aggregate expenditure decreases and income increases. ANSWER B
X-inefficiency refers to the situation in which firms with market power are operating in the upward-sloping segment of their long-run average cost curve. Indicate whether the statement is true or false ANSWER FALSE
Referring to the previous question, all else constant, a 5 unit increase in the wage index would cause: A) quantity supplied to increase by 9 units and be shown by a movement up the supply curve. B) quantity supplied to decrease by 9 units and be shown by a movement down the supply curve. C) […]
Assume the demand function for a particular good can be written as P = 150 – 6Q. When P = 12, the point elasticity of demand equals 2.08. Indicate whether the statement is true or false ANSWER FALSE
The marginal propensity to consume is 0.75, marginal propensity to invest is 0.3, and the marginal propensity to import is 0.2. What is the size of the multiplier? A) 6.67 B) 5.67 C) 4.67 D) 1.67 ANSWER A
Evidence suggests that as the amount of market power possessed by the firms in an industry increases, the amount of X-inefficiency will decrease. Indicate whether the statement is true or false ANSWER FALSE
The marginal propensity to consume is 0.50, marginal propensity to invest is 0.20, and the marginal propensity to import is 0.05. What is the size of the multiplier? A) 1.00 B) 2.86 C) 3.00 D) 0.50 ANSWER B
In the case of a linear demand curve, average revenue is equal to price, while (with the exception of Q = 1 ) marginal revenue is less than price. Indicate whether the statement is true or false ANSWER TRUE
Over time, the price of personal computers has fallen dramatically. All else constant, this would lead us to expect that demand for personal computers has become more price elastic. Indicate whether the statement is true or false ANSWER FALSE
All else constant, an increase in the level of competition among firms would be expected to reduce the amount of X-inefficiency that exists in a particular industry. Indicate whether the statement is true or false ANSWER TRUE