When a firm operates with excess capacity,
a. additional production would lower the average total cost.
b. additional production would increase the average total cost.
c. it must be a perfectly competitive firm.
d. it must be a monopolistically competitive firm.
a
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Government transfer payments like social security and unemployment benefits are
A) included in government purchases. B) not included in government purchases. C) not included in government purchases, but they are included in the consumption component of GNP. D) not included in government purchases, but they are part of the investment component of GNP. E) included in government purchases but not in the GNP.
If the economy is in a recession, it means that:
A. the economy is not in long-run equilibrium. B. total output is less than potential output. C. the short-run equilibrium is to the left of the long-run aggregate supply curve. D. All of these are true.
From October 1997 to January 1998, the economy of South Korea was in turmoil. One of the problems was:
A. the value of the U.S. $ compared to the Korean won fell by more than half. B. the currency of South Korea appreciated considerably making it very difficult for Korean exporters to sell goods abroa C. U.S. goods became very cheap to Koreans making it difficult for Korean manufacturers to compete with imports. D. the value of the won fell by more than half compared to the U.S. dollar, making U.S. goods very expensive to Koreans and Korean goods relatively inexpensive for U.S. residents.
Aggregation is the process of
A. forecasting the components of GDP. B. calculating real GDP based on nominal GDP and the price index. C. summing individual economic variables to obtain economywide totals. D. predicting when recessions will occur.