One way the government can boost the economy out of a recession is:
A. by increasing government spending.
B. with public announcements telling the public to save their money.
C. by setting price ceilings on most goods so people can afford them.
D. None of these will help an economy in recession.
A. by increasing government spending.
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There are only two firms in an industry with demand curves q1 = 30 - P and q2 = 30 - P. Both have no fixed costs and each has a marginal cost of 10 per unit produced
If they behave as profit maximizing price takers, each produces 10 units and sells them at a price of 10 so that each firm makes zero economic profits. If they form a cartel, their inverse demand curve is A) Q = 30 - P. B) Q = 60 - 2P. C) P = 60 - 2Q. D) P = 30 - Q/2.
Two economists are arguing about how to approach a problem. The first economist says, "Look, I can see in the data that consumption rises when income rises. We need to build a model with an equation that relates the two." The second economist responds, "I can see that is the case, but we have to understand why that is true before we build any equations, and then we will see what the model says about the relationship between the two." What kind of economist is the second one likely to be?
A. An engineering economist B. A behavioral economist C. A traditional economist D. An irrational economist
In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices. B. lower prices. C. lower output. D. None of these is true.
Firms react to unplanned increases in inventories by
A. increasing output. B. reducing output. C. increasing consumption. D. increasing planned investment.