The quantity of money demanded to satisfy transactions needs:
A. is intended for unexpected expenditures.
B. increases with the level of real GDP.
C. decreases with the level of real GDP.
D. is unrelated to either national income or the interest rate.
Answer: B
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The cross elasticity between computers and software is
A) negative because they are substitutes. B) positive because they are substitutes. C) negative because they are complements. D) positive because they are complements. E) positive because they are normal goods.
What is meant by aggregation? Why is aggregation important for macroeconomic analysis?
What will be an ideal response?
A monopoly shuts down when
A) the short run price is below its average variable costs. B) the long run price is below its average variable costs. C) the average cost is less than price. D) never, because it can raise its prices as high as necessary to keep operating and maximize profits.
Claude's Copper Clappers sells clappers for $40 each in a perfectly competitive market. At its present rate of output, Claude's marginal cost is $39, average variable cost is $45, and average total cost is $60 . To improve his profit/loss situation, Claude should
a. increase output b. reduce output but not to zero c. maintain the present rate of output d. shut down e. raise the price