Whenever a firm is making positive economic profit, there is nothing it can do to make more profit.
Answer the following statement true (T) or false (F)
True
Rationale: Since economic profit is calculated using all opportunity costs, positive economic profit means the firm is doing better than it could be doing if it did something else.
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Refer to Figure 26-1. In the figure above, the money demand curve would move from Money demand1 to Money demand2 if
A) the interest rate decreased. B) real GDP decreased. C) the price level increased. D) the Federal Reserve sold Treasury securities.
Inflation targets can increase the central bank's flexibility in responding to declines in aggregate spending
Declines in aggregate ________ that cause the inflation rate to fall below the floor of the target range will automatically stimulate the central bank to ________ monetary policy without fearing that this action will trigger a rise in inflation expectations. A) demand: tighten B) demand; loosen C) supply; tighten D) supply; loosen
An increase in the amount and time period for which unemployment compensation is paid will most likely
A) increase the structural rate of unemployment. B) leave the natural rate of unemployment unchanged. C) decrease the natural rate of unemployment. D) increase turnover unemployment.
Which of the following is NOT an advantage of a pollution tax?
A. It allows firms to equate its marginal abatement cost and the marginal benefit (tax savings). B. It allows a low-cost firm to abate more. C. It provides firms an incentive to invest in pollution abatement technologies. D. It allows us to predict the total volume of pollution that will be discharged.