From the perspective of the classical model, many economists would say that the most important automatic stabilizer is
a. taxes
b. imports
c. interest rates
d. transfer payments
e. passage of time
E
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Fresh Taste, Inc produces organic breakfast cereals. The market for breakfast cereals is monopolistically competitive
The figure above shows the demand curve that Fresh Taste faces (D), the company's marginal revenue curve (MR), its marginal cost curve (MC), and its average total cost curve (ATC). If Fresh Taste and other firms in the market are currently producing their profit maximizing quantities of cereals, then the market is A) in both short-run equilibrium and long-run equilibrium. B) in short-run equilibrium but not in long-run equilibrium. C) in long-run equilibrium but not in short-run equilibrium. D) neither in short-run equilibrium nor in long-run equilibrium.
Which of the following is an accurate statement about interest rates?
a. Increases and decreases in money supply have the largest effect on gross interest rates. b. Increases and decreases in money supply have the largest effect on real interest rates. c. When the short-term nominal interest rate changes, the long-term real interest rate often changes in the opposite way. d. When the short-term nominal interest rate changes, the long-term real interest rate often changes in the same way.
If the ________ tax rate equals the ________ tax rate, the tax would be proportional.
A. average; variable B. sales; personal income C. marginal; average D. corporate income; personal income
The quantity of real GDP supplied increases when the price level increases because
A) the quantity of money increases. B) the real wage rate rises. C) aggregate demand increases. D) investment increases. E) the real wage rate falls.