If a price-taking firm selling in a competitive market raises the price of its product above the market-clearing price, it will:
a. increase its profits
b. maintain its profit base since the demand for the product is inelastic.
c. be able to increase its sales.
d. not be able to sell any output.
d
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A firm is considering the purchase of a piece of equipment that will add $200 per year to the firm's revenue forever. If the interest rate is 10 percent, the firm will purchase the equipment so long as it costs less than
a. $1,000 b. $2,000 c. $4,000 d. $6,000 e. $8,000
If the Fed wishes to decrease the money supply it could
a. decrease the discount rate. b. decrease reserve requirements. c. sell government securities on the open market. d. Do any of the above.
Under a fixed exchange rate regime, what will happen to the balance of payments for the United States and Mexico when the demand for Mexican goods rises? What is the only possible solution to this problem, given the fixed exchange rate?
What will be an ideal response?
A fall in the relative prices of a country’s exports tends to ________________ that country’s net exports, and thereby, to ____ its real GDP.
A. increase; raise B. decrease; raise C. decrease; decrease D. None of the above is correct.