Efer to the above figure. Suppose the economy's initial equilibrium is represented by the intersection of LRAS 2 and AD 2. Now there is an increase in labor productivity which increases total planned production at any given price level and aggregate demand remains stable. The resulting change in the economy's long-run equilibrium position would be represented by a
A. Movement from A to B
B. Movement from B to D
C. Movement from C to B
D. Movement from C to D
Answer: B. Movement from B to D
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When choosing the production level for tomorrow you find that at an output of 100 units, the total variable costs are $20,000 and the average fixed cost is only $50 . If the market price is $200, you should
a. hire an economic consultant b. produce at a loss equal to $5,000 c. produce more than 100 units d. produce fewer than 100 units e. produce where MC is at a minimum
To find a firm's total revenue at every quantity, all you need to know is
a. the demand curve for its product. b. the demand curve for its product and its total cost. c. its profit-maximizing price and quantity. d. its total profit curve.
Suppose that the government increases expenditures by $150 billion while increasing taxes by $150 billion. Suppose that the MPC is .80 and that there are no crowding out or accelerator effects. What is the combined effects of these changes? Why is the combined change not equal to zero?
When the federal government cuts taxes and increases purchases to stimulate the economy during a period of recession, such actions are designed to be
A. expansionary. B. passive. C. contractionary. D. automatic.