In the long run, monopolistically competitive firms charge prices:
A. equal to the minimum of average total cost.
B. equal to marginal cost.
C. below marginal cost.
D. above the minimum of average total cost.
Answer: D
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In an economy where aggregate spending is given by Y = 5,500 + 0.6Y - 20,000r, the interest rate is currently 5 percent (0.05). If potential output equals 11,750, the central bank must ________ the interest rate to close the ________ gap.
A. raise; recessionary B. reduce; recessionary C. raise; expansionary D. reduce; expansionary
The initial deposit required by a buyer or seller of a futures contract is known as
A) credit. B) margin requirement. C) debit. D) marking.
In a competitive market the current price is $5 . The typical firm in the market has ATC = $5.50 and AVC = $5.15
a. In the short run firms will shut down, and in the long run firms will leave the market. b. In the short run firms will continue to operate, but in the long run firms will leave the market. c. New firms will likely enter this market to capture any remaining economic profits. d. The firm will earn zero profits in both the short run and long run.
An increase in the budget deficit causes domestic interest rates
a. and investment to rise. b. to rise and investment to fall. c. to fall and investment to rise. d. and investment to fall.