If a process is said to be integrated of order one, or I(1), _____.
A. it is stationary at level
B. averages of such processes already satisfy the standard limit theorems
C. the first difference of the process is weakly dependent
D. it does not have a unit root
Answer: C
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
A tax on polluting firms
A. would shift the LRAC curve upward. B. would shift the LRAC curve downward. C. would have the same impact on the firm as a subsidy. D. tends to have the perverse effect of increasing pollution.
U.S. citizens and firms earn foreign exchange when they sell products to citizens and firms in other countries.
Answer the following statement true (T) or false (F)
The Taste Freeze Ice Cream Company is a perfectly competitive firm producing where MR = MC. The current market price of an ice cream sandwich is $5.00. Taste Freeze sells 200 ice cream sandwiches. Its AVC is $4.00 and its AFC is $3.00. What should Taste Freeze do?
A. Continue to produce because price exceeds AVC. B. Shut down and produce zero sandwiches because price is less than ATC. C. Increase production so that AFC will decrease. D. Decrease production so that AVC will decrease.