Over time in the long run we expect unplanned inventory expenditure to:
A. equal zero as planned inventories should equal actual inventories.
B. increase because firms have a hard time figuring out what consumers want.
C. be negative as firms will tend to reduce production is they think people won’t purchase their product.
D. be positive as on average firms tend to be optimistic about sales, but if they don’t sell product they store it.
A. equal zero as planned inventories should equal actual inventories.
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When an economy experiences deflation, investment will:
A. decrease, because businesses will not take out loans that will increase in value over time. B. increase, because businesses will take out loans that will increase in value. C. decrease, because businesses will spend cash instead of borrowing it. D. increase, because businesses will spend cash instead of borrowing it.
If the price elasticity of demand was 4.0 (in absolute terms), a 10% off sale would lead to:
a. a 40% increase in purchases by customers. b. a 40% decrease in purchases by customers. c. a 2.5% increase in purchases by customers. d. a 2.5% decrease in purchases by customers.
Which type of unemployment is most likely to help the economy become more efficient?
a. cyclical b. structural c. seasonal d. frictional e. underemployment
There is strong evidence that entrepreneurs are characteristically
A. driven by greed. B. overoptimistic. C. not good business people. D. satisfied with the status quo.