Refer to the information provided in Figure 6.1 below to answer the question(s) that follow.
Figure 6.1Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hot dog is $2.50. Tom's monthly income is
A. $16.
B. $50.
C. $80.
D. $100.
Answer: D
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Assume the firms in a perfectly competitive industry are initially in long-run equilibrium and the cost of labor increases. In the short run, this will cause firms in the industry to:
A) reduce output and incur a loss. B) reduce output and earn a positive economic profit. C) increase output and incur a loss. D) increase output and earn a positive economic profit.
If we consider the equation PAE = A + bY the part that corresponds to the MPC when we make simplifying assumptions is:
A. b B. Y C. A D. PAE
Which of the following rise during a recession?
a) losses but not unemployment b) unemployment but not losses c) neither losses nor unemployment d) both losses and unemployment
The U.S. is able to maintain a large trade deficit because:
A. it is balanced by a large capital surplus. B. when the business cycle is in a boom, it will be a trade surplus. C. it is balanced by a large capital deficit. D. None of these statements is true.