If the shutdown rule, p < AVC, is the same in the short run and the long run, explain why the shutdown prices may be different
What will be an ideal response?
In the short run there are fixed costs, but in the long run all costs are variable. In the long run the average variable cost is usually higher than in the short run.
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In the loanable funds market, if the real interest rate is higher than the equilibrium real interest rate,
A) the demand for loanable funds curve shifts rightward to restore the equilibrium. B) there is a surplus of investment. C) there is a shortage of loanable funds. D) the demand for loanable funds curve shifts leftward to restore the equilibrium. E) there is a surplus of loanable funds.
A firm is said to be a price taker if it:
A) can affect the market price of goods by changing its supply. B) sells as much of any good as it wants at the prevailing market price. C) consults the government before fixing the price of its goods and services. D) is not free to enter a new market or exit from an existing market.
Which of the following is included in M0, but not in M1?
A) demand deposits B) deposits of depository institutions at the Federal Reserve C) currency held by the U.S. public D) U.S. currency held by foreigners
If autonomous consumption is $1,000 . the MPC is 0.75, net taxes are $500, investment spending is $800, and government purchases equals $500, and NX = $0, what is equilibrium GDP?
a. $1,800 b. $1,925 c. $2,566.7 d. $7,200 e. $7,700