According to the innovation theory of profit, above-normal profits are necessary to compensate the owners of the firm for the risk they assume when making their investments
a. true
b. false
b
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
When controls over market prices are enacted, the consequences are always clear.
Answer the following statement true (T) or false (F)
Suppose ice cream cones costs $3 . Molly holds $60 . What is the real value of the money she holds?
a. $60 . If the price of ice cream cones rises, to maintain the real value of her money holdings she need to hold more dollars. b. $60 . If the price of ice cream cones rises, to maintain the real value of her money holdings she need to hold fewer dollars. c. 20 ice cream cones. If the price of ice cream cones rises, to maintain the real value of her money holdings she needs to hold more dollars. d. 20 ice cream cones. If the price of ice cream cones rises, to maintain the real value of her money holdings she needs to hold fewer dollars.
Political instability is an impediment to development mainly because it:
A. undermines both domestic and foreign investment in a developing country. B. creates cultural and social differences among groups in developing countries. C. produces excessive levels of domestic saving. D. redistributes income.