Increases in long-run average cost that result from output increases is
A) the law of diminishing marginal product.
B) economies of scale.
C) constant returns to scale.
D) diseconomies of scale.
Answer: D
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Which one of the following is an example of discretionary fiscal policy used to correct an inflationary gap?
A) an increase in government expenditures approved by Congress B) decrease in the money supply by the Federal Reserve C) a tax increase passed into law by Congress D) an agreement among major banks to lower interest rates
Which of the following is not a source of rents?
a. Tariffs b. Logrolling c. Price supports d. Entry barriers
Which of the following is NOT included in the MZM definition of money?
A. small-denomination time deposits. B. currency. C. travelers checks. D. money market funds.
Suppose two firms are in a game situation, and they each must decide on a strategy regarding whether to select a high price or a low price. Profits for a firm are highest when it selects a low price, while the other selects a high price; profits are
lowest if one selects a high price, while the other selects a low price; profits are in between when both select low prices; and profits are slightly higher when both select high prices. In the absence of collusion we expect A) one of the firms to select a high price and the other a low price. B) one firm to select a high price and the other a low price in the first period, followed by a reversal in the second period. C) both to select high prices. D) both to select low prices.