If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years, then
A) investment spending will remain unaffected. B) investment spending will rise and then fall.
C) investment spending will rise. D) investment spending will fall.
D
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The above figure shows supply and demand curves for apartment units in a large city. If the city government passes a law that establishes $350 per month as the legal maximum rent, producer surplus
A) increases. B) decreases. C) stays the same. D) changes in a direction that cannot be determined from the information given.
Suppose we observe the price level increasing and real GDP decreasing. An explanation for this is that
A) the dollar weakened and the effect on aggregate supply was less than the effect on aggregate demand. B) the dollar weakened and the effect on aggregate supply was greater than the effect on aggregate demand. C) the dollar strengthened and the effect on aggregate supply was less than the effect on aggregate demand. D) the dollar strengthened and the effect on aggregate supply was greater than the effect on aggregate demand.
In the long run in monopolistic competition, a firm will not produce the output level that minimizes average cost because
a. that output level is less than the profit-maximizing one b. at that output level, MC is greater than MR c. at that output level, P is greater than MR d. demand is horizontal e. that would leave the firm with excess capacity
An increase in government purchases, an increase in the interest rate, and an increase in consumption all shift the aggregate expenditure line upward
a. True b. False