Figure 11.3Figure 11.3 shows demands and costs for a monopolistically competitive firm. When the firm's demand curve shifts from D1 to D2 and to D3, in the long run we would expect:
A. the firm to earn a zero economic profit.
B. the firm to charge a price equal to its marginal cost.
C. the firm to increase its output level.
D. the firm to produce at the lowest average cost.
Answer: A
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The main goal of fiscal policy should always be to
a. generate a budget deficit. b. balance the budget. c. balance C + I with government spending. d. balance aggregate demand with aggregate supply.
Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and net nonreserve international borrowing/lending balance in the context of the Three-Sector-Model? a. The quantity of real
loanable funds per time period falls and net nonreserve international borrowing/lending balance becomes more negative (or less positive). b. The quantity of real loanable funds per time period rises and net nonreserve international borrowing/lending balance becomes more negative (or less positive). c. The quantity of real loanable funds per time period falls and net nonreserve international borrowing/lending balance becomes more positive (or less negative). d. The quantity of real loanable funds per time period and net nonreserve international borrowing/lending balance remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Which one of the following is the largest component of the money supply (M1) in the United States?
A. checkable deposits B. gold certificates C. credit cards and traveler's checks D. Federal Reserve notes
The demand curve of a perfectly competitive firm is determined by
a. the price the firm chooses to charge. b. the intersection of the market demand and supply curves c. the reputation of the firm. d. the level of the quality of the good the firm produces.