In a perfectly competitive market, if price is less than average total cost, but greater than average variable cost at the level of output where marginal cost equals marginal revenue:
A. the firm is earning positive economic profit.
B. the firm is earning negative economic profit.
C. the firm should shut down.
D. We cannot determine whether the firm is earning positive or negative profits.
Answer: B
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A recession is a decline in
A. the inflation rate that lasts six months or longer. B. real GDP that lasts six months or longer. C. the unemployment rate that lasts six months or longer. D. potential GDP that lasts six months or longer.
The current monetary system in the United States is
A) a mix of fiat money and exchange using transactions deposits at banks. B) a commodity money system. C) a gold standard. D) a commodity-backed fiat money system.
In a typical domestic lending boom, almost all of the amount borrowed is dedicated toward investments that bring about substantial future gains.
Answer the following statement true (T) or false (F)
An investment is profitable as long as its internal rate of return is equal to the rate of interest
Indicate whether the statement is true or false