Suppose the multiplier has a value that exceeds 1, and there are no crowding out or investment accelerator effects. Which of the following would shift aggregate demand to the right by more than the increase in expenditures?
a. an increase in government expenditures
b. an increase in net exports
c. an increase in investment spending
d. All of the above are correct.
d
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Suppose that in a perfectly competitive market, the market price is $10. A firm in that market has marginal cost of $10, average total cost of $12, and it is producing 100 units. The firm is
A) earning $1,000 in total economic profits and is maximizing economic profits. B) earning $200 in total economic profits and is maximizing economic profits. C) earning zero total economic profits and is not maximizing economic profits. D) incurring $200 in total economic losses and is minimizing economic losses.
Resolving Adam Smith's diamond-water puzzle involves
a. realizing that price is not directly related to total utility. b. knowing that at optimal purchase, price will tend to equal marginal utility. c. knowing that, as increasing quantities of a good are consumed, marginal utility diminishes and, conversely, consuming a small quantity of a good produces high marginal utility. d. All of the above are correct.
The cost of production in an oligopolistic industry is identical for all the firms
a. True b. False Indicate whether the statement is true or false
The price index was 150 in the first year, 142.5 in the second year, and 138.2 in the third year. The economy experienced
a. 5.0 percent deflation between the first and second years, and 3.0 percent deflation between the second and third years. b. 7.5 percent deflation between the first and second years, and 4.3 percent deflation between the second and third years. c. 5.3 percent inflation between the first and second years, and 4.1 percent inflation between the second and third years. d. 7.5 percent inflation between the first and second years, and 4.3 percent inflation between the second and third years.