The impact of an increase in government purchases may be smaller than first assumed (in the crowding out effect) because:
a. As the new spending takes place, income and real GDP will rise which will cause households and firms to increase their demand for money to accommodate increased buying and selling.
b. The increase in the demand for money will cause the interest rate to rise
c. As a result of the higher interest rate, consumers may decide against buying a car, a home, or other interest sensitive goods, and businesses may cancel or scale back plans to expand or buy new capital equipment.
d. All of the above
d
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The key concept that serves as the basis for the study of economics is:
A. unemployment. B. scarcity. C. opportunity cost. D. money.
A monopolist faces a demand curve given by P = 20 - Q and has total costs given by TC = Q2. By using a bit of calculus, you should be able to determine that the firm's marginal revenue is MR = 20 - 2Q and its marginal cost is MC = 2Q. What is its profit-maximizing price?
a. $20 b. $15 c. $10 d. $5
In the short run, a firm considers its fixed cost as a(n):
A. sunk cost. B. variable cost. C. implicit cost. D. marginal cost.
If an industry's long-run supply curve slopes downward, then the industry is
A. an increasing-cost industry. B. a constant-cost industry. C. a decreasing-cost industry. D. a fixed-cost industry.