Which of the following assumptions of the classical model is the best reason we cannot use it to explain short-run economic fluctuations?
a. Markets never clear in the long run.
b. The labor market clears.
c. Prices remain constant and supply and demand adjust.
d. It does not show how an economy recovers from a recession.
e. Government intervention is essential to get markets to clear.
B
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A perfectly competitive firm's short-run supply curve is the part of its marginal cost curve that is:
a. upward sloping. b. above the minimum level of average variable cost. c. above average fixed cost. d. both a and b.
An example of an external debt is
a. French public debt held by Americans b. French investment in the United States financed by French debt c. French government debt held by French banks d. French public debt issued by French private companies e. U.S. government debt held by the Federal Reserve System
In a competitive market, the market demand is Qd = 150 - 2P and the market supply is Qs = 30 + 4P. A price ceiling of $16 will result in a
A. shortage of 34 units. B. surplus of 34 units. C. surplus of 58 units. D. shortage of 24 units.
You borrow $40,000 at an interest rate of 5% to open Organic Foods, an all-natural food store. You will earn an economic profit if the return on your investment is
A. greater than 5%. B. 10% or greater. C. between 0 and 5%. D. 5%.