How will firms react to rising output price levels? What reactions can they expect from their employees and suppliers over time?
Firms have an incentive to increase real output if the price of the goods they are selling is rising faster than the cost of their inputs. Suppliers and workers will begin to experience diminished purchasing power. As a result of this diminished purchasing power they will begin to adjust their demands for higher wages and higher prices for inputs.
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The opportunity cost of an activity means the:
a. amount of money the activity costs. b. number of hours that is required to engage in this activity. c. expected gains by engaging in the activity. d. amount of other things that must be sacrificed in order to engage in the activity. e. expected gains minus the expected costs of engaging in the activity.
A monopolist faces a horizontal demand curve while a perfect competitor faces a downward sloping demand curve for their respective products
Indicate whether the statement is true or false
Banks hold reserves:
A. to increase profits. B. to meet depositor withdrawals and payments. C. only because the government requires them to hold reserves. D. to earn interest.
If inventories decline by more than analysts predict they will decline, this implies that
What will be an ideal response?