The vital link between the real and monetary sectors of the economy is the: A) price level. B) interest rate. C) balance of payments. D) budget deficit. ANSWER B
According to the circular flow model, all else constant, an increase in government spending should cause an increase in spending, income, and production in the economy. Indicate whether the statement is true or false ANSWER TRUE
Diseconomies of scale are illustrated by: A) a downward sloping long-run average cost curve. B) a flat long-run average cost curve. C) an upward-sloping long-run average cost curve. D) an upward-sloping short-run average total cost curve. ANSWER C
The sum of personal consumption expenditure, investment expenditure, government expenditure, and net export expenditure on the total amount of real output in the economy in a given period of time is called: A) potential GDP. B) aggregate expenditure. C) real money balances. D) none of the above. ANSWER B
Long-run macroeconomic policies concentrate on: A) minimizing fluctuations around potential GDP. B) maximizing fluctuations around potential GDP. C) incentives for increasing productivity and the potential output of the economy. D) none of the above. ANSWER C
Assume a group of firms has formed a cartel and the cartel is in engaged in joint profit maximization. As such, each firm, acting in its own interests, has an incentive to expand production up to the point at which: A) its marginal cost equals the marginal revenue earned by the cartel. B) its marginal […]
To develop a competitive advantage and increase their firm’s profitability, managers need to understand what affects their revenues, costs, and their ability to set prices. Indicate whether the statement is true or false ANSWER TRUE
“Gross Investment spending” refers exclusively to purchases of plant and equipment by businesses and net changes in business inventories. Indicate whether the statement is true or false ANSWER FALSE
To maximize joint profits, a cartel must determine the level of output at which: A) joint marginal revenue equals the marginal cost of the largest member of the cartel. B) marginal revenue equals joint marginal cost. C) the horizontally sum of the members marginal cost curves is at a minimum. D) joint marginal revenue equals […]
When a demand curve is perfectly elastic: A) marginal revenue = average revenue = price. B) marginal revenue > average revenue = price. C) marginal revenue < average revenue = price. D) marginal revenue > average revenue > price. ANSWER A