To explain the existence of excess capacity, Keynes argued that
A) prices and wages are flexible, and eventually markets would go back to equilibrium.
B) the long run average cost curve should not occur at the full employment level.
C) the aggregate demand curve can be manipulated by advertising.
D) prices and wages are inflexible in the downward direction.
D
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If the marginal propensity to save (MPS) increases, the multiplier
A) decreases. B) can either increase or decrease, depending on what happens to the marginal propensity to consume (MPC). C) increases. D) stays the same.
If a central bank wishes to raise the foreign-exchange value of its currency, it will
A) buy domestic currency and sell foreign assets. B) sell domestic currency and buy foreign assets. C) attempt to reduce domestic interest rates. D) attempt to raise the domestic price level relative to foreign price levels.
Which of the following market models results in the highest price assuming a fixed number of firms with identical costs and a given demand curve?
A) Cournot B) Stackelberg C) Monopoly D) Price is the same in all three markets.
Someone is considered to exhibit risk-seeking behavior if he:
A. will always choose the riskier venture when given two choices. B. will only participate in high-risk situations. C. has a high willingness to take on situations with risk. D. has a low willingness to take on situations with risk.