For a perfectly competitive firm, when P = MC = ATC, the most profit the firm can earn is zero.
Answer the following statement true (T) or false (F)
True
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
While much of New Classical macroeconomics is being refuted by the evidence, at least one part of it may be a permanent legacy to all economists. It is the insistence on a certain aspect of macroeconomic policy:
A) It has as much impact on SAS as on AD. B) It has its impact on nominal and not real variables. C) People will try to anticipate it and then act accordingly. D) It has no impact on SAS or AD, but does affect LAS.
The aggregate supply curve will be horizontal if
A. there is no cyclical unemployment. B. the economy is operating with considerable idle capacity. C. the economy is close to full employment. D. the economy is producing real GDP in excess of its potential.
GDP tends to rise and fall during economic fluctuations but other measures follow the same pattern. One of these measures is
A. the annual precipitation rate. B. the growth of the money supply. C. the inflation rate. D. the unemployment rate.