Reducing the fed funds rate can increase GDP in the short term because at lower interest rates
A. households will attempt to save more.
B. taxes are lower, which increases disposable income.
C. Individuals and businesses will want to borrow and spend more.
D. banks will earn greater profits on loans.
Answer: C
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Decreasing marginal returns
A) can be avoided if a firm watches costs. B) affect all firms, but at different production levels. C) affect all firms at the same level of production. D) disappear when the firm produces a large enough level of output. E) mean that the average product of labor starts as a negative number and then becomes positive.
Suppose that a firm's long-run average total costs of producing hand-crafted chairs is $300 when it produces 10,000 chairs and $325 when it produces 11,000 chairs. For this range of output, the firm is likely experiencing
a. economies of scale. b. constant returns to scale. c. specialization. d. coordination problems.
The United States was officially in a recession in ______.
a. January 2004 b. January 2005 c. December 2006 d. December 2007
A decrease in the price level in an economy is likely to cause a(n) _____
Fill in the blank(s) with the appropriate word(s).