Assuming full employment is at the intersection of AD3 with the aggregate supply curve for the economy depicted in Figure 8.7, the worst unemployment problem would exist when AD is located at
A. AD1.
B. AD2.
C. AD3.
D. AD5.
Answer: A
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Which of the costs discussed in the chapter is the most important when a firm is deciding how much to produce?
A. Marginal cost because this cost shows the additional cost associated with producing one more unit of output. Firms will use this information to decide to produce more or less output. B. Variable costs because these costs change as output changes. If the firm wants to maximize profits, it will choose to produce a quantity where variable costs are minimized. C. Fixed costs because these costs are spent and cannot be changed in the time period under consideration. If fixed costs are higher, the firm will choose to produce more output. D. Costs that are spent to improve the image of the firm. A firm will choose to increase output if it spends a large amount on advertising and brand image.
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Kaitlyn and Larissa have formed a dog bathing and grooming business. The number of dogs they can bathe or groom in any given day is depicted in Table 2.1. The opportunity cost of grooming the third dog in a day is bathing ________ dog(s).
A. 3 B. 4 C. 5 D. 18
Suppose that nominal GDP in year 1 is 200 and nominal GDP in year 2 is 242. Assume that inflation is ten percent per year. How fast did the economy grow between these two years?
A. 10 percent B. 12 percent C. 21 percent D. 42 percent
A positive statement is
A) about what ought to be. B) about what is. C) the result of a model's normative assumptions. D) valid only in the context of a model with simple assumptions.