A firm's markup is the amount by which ________ exceeds ________
A) price; average total cost
B) price; marginal cost
C) average total cost; marginal cost
D) price; average variable cost
B
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Suppose the nominal interest rate on a one-year car loan is 8% and the inflation rate is expected to be 3% over the next year. Based on this information, we know:
A. the ex post real interest rate 11%. B. at the end of the year, the borrower pays only 5% in nominal interest. C. the lender benefits more than the borrower because of the difference in the nominal versus real interest rates. D. the ex ante real interest rate is 5%.
Expansionary fiscal policy involves
A. a decrease in government spending and/or an increase in taxes. B. only an increase in taxes. C. an increase in government spending and/or a decrease in taxes. D. only a decrease in government spending.
An outcome is socially optimal if it:
A. maximizes total economic surplus. B. leaves no unexploited opportunities for individuals. C. is an equilibrium outcome. D. it is determined by the government.
Taxes levied on sharply defined bases tend to distort choice ________ and impose ________ excess burden than taxes on more broadly defined bases.
A. less; larger B. more; smaller C. more; larger D. less; smaller