Profit is the:
A. sum of total revenue and total cost.
B. total revenue minus total cost.
C. total cost minus total revenue.
D. None of these is true.
Answer: B
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If potential output equals 4,000 and short-run equilibrium output equals 3,500, there is a ________ gap and the Federal Reserve must ________ real interest rates in order to close the gap.
A. expansionary; raise B. recessionary; raise C. recessionary; reduce D. recessionary; not change
Little Percy lives in two periods. His earnings in the present are 150; in the future he will earn 10% more than today. The interest rate is 5 percent. If his consumption today is 160, what is the most he can consume in the future?
What will be an ideal response?
The definition of cross elasticity of demand for two products X and Y is
A. percentage change in quantity of X demanded/percentage change in quantity of Y demanded. B. percentage change in price of Y/percentage change in quantity of X demanded. C. percentage change in price of Y/percentage change in price of X. D. percentage change in quantity of X demanded/percentage change in price of Y.
If the interest rate in the Mexican economy increases, then the most likely outcome would be that, in Mexico, the
a. economy will move to a new point along its existing consumption curve b. consumption curve will shift upward c. consumption curve will shift downward d. investment curve will shift upward e. economy will move to a new point along its existing investment curve