Which of the following costs do not vary with the amount of output a firm produces?
a. average fixed costs
b. fixed costs and average fixed costs
c. marginal costs and average fixed costs
d. fixed costs
d
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According to the new classical model, the output cost of reducing inflation
a. is the costs of the revenue lost by printing less money. b. is the lost income from the large recession that will occur as aggregate demand falls. c. may be small if the policy to reduce inflation is seen as credible by the public. d. will be zero if it is unanticipated.
Does an increase in the inflation rate increase or decrease the amount of money people choose to hold at any given price level? What would an increase in the inflation rate do to money demand? What would this change in money demand do to the price level?
Suppose a central bank tries to keep exchange rates fixed. When there is an increase in the demand for foreign goods, the central bank will most likely
A. use foreign reserves to buy the domestic currency. B. sell the domestic currency in exchange for foreign reserves. C. do nothing. D. buy foreign currency in exchange for the domestic currency.
Keynesians tend to agree that during a depression:
A. governments should not do anything because anything they do will likely make the situation worse. B. decreasing government spending is likely to improve economic conditions. C. increasing taxes is likely to improve economic conditions. D. increasing government spending is likely to improve economic conditions.