Explain the reason behind the declining gap between average cost (AC) and average variable cost (AVC) curves at higher levels of output
The gap between the AC and the AVC is the average fixed cost of production, which is obtained by dividing the total fixed cost by the level of output. As output level rises, average fixed cost of production declines. Hence, the gap between the AC and the AVC also declines as output expands.
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The central bank of the European Union is called the
A) Federal Reserve. B) European Central Bank. C) Banco Europe. D) Bundesbank.
Which of the following is true?
a. Monetary policy influences long-term real interest rates more than short-term interest rates. b. Short-term interest rates are primarily determined by real factors and the expected inflation. c. A shift to a more expansionary monetary policy will tend to reduce short-term interest rates. d. A shift to a more expansionary monetary policy will tend to reduce the expected rate of inflation in the future.
If the government removes a binding price ceiling from a market, then the price paid by buyers will
a. increase, and the quantity sold in the market will increase. b. increase, and the quantity sold in the market will decrease. c. decrease, and the quantity sold in the market will increase. d. decrease, and the quantity sold in the market will decrease.
A currency system in which governments try to keep the values of their currencies constant against another is called a ________ exchange rate system.
A. fixed B. stable C. consistent D. flexible