If a firm's MPK is below its user cost of capital, it is employing too ________ capital and its profit is ________ in the long run
A) little, above what it will be
B) little, below what it could be
C) much, above what it will be
D) much, below what it could be
D
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The Big Tradeoff
What will be an ideal response?
If the economy has been producing at a point where real GDP is less than potential GDP, what fiscal policy can the federal government use to restore real GDP to potential GDP?
A) decrease the quantity of money B) raise the interest rate C) increase taxes D) cut government expenditure on goods and services E) cut taxes
When it comes to choosing an policy instrument, both the ________ rate and ________ aggregates are measured accurately and are available daily with almost no delay
A) three-month T-bill; monetary B) three-month T-bill; reserve C) federal funds; monetary D) federal funds; reserve
All of the following can be used to reduce risk except which one?
A) settling a law suit B) entering into litigation C) purchasing insurance D) diversifying your stock portfolio