How is economic profit calculated?
What will be an ideal response?
Economic profits equal total revenues minus explicit and implicit costs.
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Microeconomic models are used to
A) make predictions. B) explain real-life phenomena. C) evaluate policy alternatives. D) All of the above.
In the balance of payments, if there are no statistical errors or discrepancies, which of the following is TRUE of the sum of the capital account balance, the current account balance, and the official reserve transactions account balance?
A) This sum is either positive or negative, depending on whether the sum of all surplus and deficit items associated with cross-border transactions is positive or negative. B) This sum must always be zero, because the sum of all surplus and deficit items associated with cross-border transactions must equal zero. C) This sum is positive only if the U.S. government operates with a budget surplus. D) This sum is positive only if the U.S. government operates with a budget deficit.
When an economy's actual output is greater than its potential at some point in time, we say that it is experiencing:
A. a negative output gap. B. deflation. C. a positive output gap. D. inflation.
The tax revenues of local governments are typically
A. slightly less than their expenditures. B. more than their expenditures. C. equal to their expenditures. D. less than one-half of their expenditures.