By the accelerator hypothesis, if a firm's actual sales jump in one period to a higher maintained level, that firm's replacement investment
A) also jumps in one period to a higher maintained level.
B) gradually drifts upward to a higher maintained level.
C) jumps upward and then falls back to zero.
D) jumps upward and then falls back part of the way.
B
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Based on the figure above, when the firm maximizes its profit, it produces ________ cans per day
A) 0 B) more than 0 and less than 5 C) 5 or more but less than 10 D) 10 E) more than 10
If you bought a long futures contract you hope that bond prices
A) rise. B) fall. C) are stable. D) fluctuate.
Transaction and information costs
A) benefit borrowers at the expense of savers. B) benefit savers at the expense of borrowers. C) transaction costs hurt savers while information costs hurt borrowers. D) create profit opportunities for those who can reduce these costs.
Which of the following statements about economic models is TRUE?
A) A good economic model is complex. B) A good model does not rely on any assumptions. C) Every model is based on a set of assumptions. D) Economic models are designed to explain what people need.