Keynesians, monetarists, and classical economists all agree that the transactions demand for money is the demand for money by households for
a. precautionary purposes
b. spending purposes
c. liquidity purposes
d. saving purposes
e. investment purposes
B
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Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. Which of the following statements is correct?
A. Cathy has a comparative and absolute advantage in pies. B. Cathy has a comparative advantage in pies, and Lewis has an absolute advantage in pies. C. Lewis has a comparative and absolute advantage in pies. D. Lewis has a comparative advantage in pies, and Cathy has an absolute advantage in pies.
Suppose that when disposable income increases by $1,000, consumption spending increases by $750. Given this information, we know that the marginal propensity to consume (MPC) is
A) .25. B) .75. C) $1,000/$750 = 1.33. D) 1/.25 = 4.
If a firm sells its output at a price greater than AC, it will earn economic profit.
Answer the following statement true (T) or false (F)
In the long run,
a. both monopolists and perfectly competitive firms produce at minimum long-run average total cost. b. a monopolist will exit the industry if he is earning zero economic profit. c. a monopolist will always charge a higher price than he charges in the short run. d. consumer surplus is smaller if an industry is a monopoly than if it is perfectly competitive.