In economics, the term capital refers only to some form of money.
Answer the following statement true (T) or false (F)
False
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Suppose the economy is initially in long-run and short-run equilibrium. If the Fed decides to pursue a contractionary monetary policy, we will see
A) bond prices fall, interest rates fall, aggregate demand remains unchanged as consumption spending decreases, but investment spending increases. GDP remains constant in both the short run and the long run, but the price level falls in both. B) bond prices fall, interest rates rise, aggregate demand falls as investment and consumption spending decrease, and real GDP and the price level decreasing in the short-run, but only the price level decreasing in the long run. C) bond prices fall, interest rates rise, aggregate demand falls as investment spending decreases and consumption spending remains unchanged, and real GDP and the price level decrease in the short run, but only the price level falls in the short run. D) interest rates rise but no change in bond prices. Aggregate demand falls as consumption spending and investment spending decrease, and the price level and real GDP fall in both the short run and the long run.
Which of the following is true about advertising by a firm?
a. It is not always successful in increasing demand for a firm's product. b. It attempts to increase demand and to make demand more inelastic. c. It may reduce per unit costs of production when economies of scale are experienced. d. All of these.
Which of the following circumstances would not cause GDP to either understate or overstate economic well-being today in comparison to that which existed 75 years ago?
A. A shorter workweek today B. Greater military spending today C. A trend toward merger and consolidation of business firms D. More air and water pollution
Assuming that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?
a. The output of the monopolist will be too large and the price too high. b. The output of the monopolist will be too small and the price too low. c. The output of the monopolist will be too small and the price too high. d. The price will be too high, but the impact of monopoly on the output is indeterminate.