A perfectly competitive firm has to charge the same price as every other firm in the market. Therefore, the firm
A) faces a perfectly inelastic demand curve.
B) is not able to make a profit in the short run.
C) is a price taker.
D) faces a perfectly elastic supply curve.
Answer: C
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
In the long run, the expansion path is
A) horizontal. B) vertical. C) diagonal. D) Not enough information.
Total surplus:
A. can never fall below zero. B. is always above zero. C. can never be zero. D. is less than the consumer surplus.
The federal funds rate is ________ of the Fed
A) a technique B) a monetary policy rule C) the monetary policy instrument D) an objective E) a goal