The economy is in the horizontal portion of the AS curve, investment spending is interest insensitive and there is no liquidity trap. According to the Keynesian transmission mechanism, if the money supply increases the interest rate will __________, investment spending will __________, the AD curve will __________, and Real GDP will __________
A) fall; fall; left; fall
B) rise; drop; left; fall
C) fall; remain unchanged; not shift; not change
D) rise; remain unchanged; not shift; not change
E) none of the above
C
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An assumption behind the infant-industry argument for tariff protection is that
A) foreign competitors are selling output below average cost. B) the domestic industry will be facing an upward adjustment in its average cost. C) the domestic industry will eventually gain a comparative advantage in producing the good. D) the market needs additional competition to satisfy consumer demand.
Refer to Figure 11-1. Diminishing marginal productivity sets in after
A) the 2nd worker is hired. B) the 3rd worker is hired. C) the 4th worker is hired. D) the 5th worker is hired.
Which of the following factors would shift the supply curve for ice cream to the right?
a. a new cooling technology emerges b. the price per unit increases c. the number of producers in the market for ice cream increase d. Both A&C
For a pure monopoly to exist, which statement must be true?