Which of the following must be true if average variable costs are decreasing?
a. Average fixed cost exceeds average total cost.
b. Marginal cost exceeds average variable cost.
c. Marginal cost is less than average variable cost.
d. Marginal cost is less than average total cost.
C
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Each of the following took place in the latter half of the 1990s except
A. a declining federal budget deficit. B. a declining unemployment rate. C. the spread of computerization. D. a rising rate of inflation.
There is a movement along the demand for money curve if
A) the nominal interest rate rises. B) there is an economic expansion so that real GDP increases. C) banking customers use ATM machines more. D) the price level increases.
Suppose the government spending multiplier is 2. The federal government cuts spending by $40 billion. What is the change in GDP if the price level is not held constant?
A) a decrease of less than $80 billion B) an increase equal to $80 billion C) an increase of greater than $80 billion D) an increase of less than $80 billion E) a decrease of more than $80 billion
If Molly Bee increases her work hours when her wage increases, then
A) the substitution effect of the wage increase outweighs the income effect. B) the income effect of the wage increase outweighs the substitution effect. C) leisure is an inferior good to Molly. D) Molly is spending beyond her means.