Refer to Figure 8.2. As the firm makes its long-run adjustment, which must be true?
A) It takes advantage of increasing returns to scale.
B) It suffers from decreasing returns to scale.
C) It takes advantage of increasing marginal product.
D) It takes advantage of economies of scale.
E) It takes advantage of diseconomies of scale.
D
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In the long run, a firm in monopolistic competition produces where the slope of the average total cost curve is
A) negative. B) zero. C) positive. D) equal to the marginal cost.
If the required reserve ratio, m, is 20 percent, then the oversimplified money multiplier is
a. 10. b. 5. c. 4. d. 2.
The central bank unwound unconventional policy slowly because:
A. the policy had become conventional. B. the Fed was unclear how it could unwind the policy. C. the economy remained in a recession. D. the Fed was concerned doing so quickly would lead to a sudden fall in asset prices.
In the early 2000s, the George Bush administration passed a series of tax cuts and spending increases to fight a recession. This combination of policies most likely:
A. had no effect on the trade deficit. B. decreased the U.S. trade deficit. C. had an unpredictable effect on the trade deficit. D. increased the U.S. trade deficit.