Assume the Keynesian transmission mechanism is operational and the economy is currently operating in the horizontal portion of the AS curve. If the money supply increases and the demand for money curve is downward sloping and investment is interest ____________, then Real GDP will ___________________
A) sensitive; rise
B) insensitive; remain unchanged
C) sensitive; remain unchanged
D) insensitive; rise
E) a and b
E
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Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. If the Busy Bee produces 40 hamburgers per hour, then
A) marginal revenue will exceed marginal cost. B) profit will be maximized. C) marginal revenue will be negative. D) marginal revenue will be maximized. E) both the marginal revenue and the price will be negative.
Happy Bagels sells its bagels for $6 each and the firm has a constant marginal cost of $4 per bagel, which is equal to its (constant) average total cost. If Happy Bagels does not sell a bagel the day it is produced, the bagel is sold as day-old for $2. If Happy Bagels is currently holding 50 bagels in inventory and the probability that Happy Bagels will sell 50 bagels or more is 0.40, which of
the following statements is true? A) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to double its inventory. B) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to increase its inventory. C) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to decrease its inventory. D) Happy Bagels is holding the profit-maximizing, optimal level of inventory.
Suppose a U.S. firm buys a one-year U.K. bond for 6,000 British pounds when 1 British pound is worth $1.50 on the foreign exchange market. What is the firm's approximate rate of return on the bond if the interest rate on the bond is 15 percent and the exchange rate is 1 British pound worth $1.93 at maturity?
a. 11 percent b. 15 percent c. 25 percent d. 33 percent e. 48 percent
In 1980, in order to stimulate agricultural production, Fidel Castro allowed Cuban farmers to sell their goods directly to consumers and keep whatever profit they made. Some farmers were earning $50,000 per year, compared with the average worker income of $2,400 . The workers resented this. Castro denounced the farmers as "capitalist gangsters" and closed the free markets. Cuban cash income
declined five percent and fresh vegetables were in short supply. This illustrates the economic concept of the a. law of comparative advantage. b. equality-efficiency trade-off. c. cost disease of the service sector. d. unemployment-inflation trade-off. e. All of the above are correct.