A firm that has negative economic profits has accounting profits that are
A) zero.
B) positive.
C) negative.
D) indeterminate without more information.
D
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The law of diminishing returns begins first to affect a firm's short-run cost structure when
A) average variable cost begins to increase. B) marginal cost begins to increase. C) average cost begins to increase. D) average fixed cost begins to decrease.
The textbook tells us that in the short run, people typically ___________ price changes when compared to the long run
a. are very responsive to b. are more sensitive to c. are less sensitive to d. do not respond to e. are unaware of
Government can raise GDP by $1,000 billion by:
a. raising government purchases b. reducing taxes c. increasing transfer payments d. All of the above.
Why is monetary policy more effective in an open economy than in a closed economy?
a. Trade deficits affect exchange rates, which can offset adverse interest rate effects. b. Borrowers can choose to use foreign capital, so that interest rate effects are stronger than expected. c. Interest rate changes affect exchange rates, so that capital flows reinforce the effect of monetary policy. d. Banks can choose to lend to foreigners, so that interest rate effects are essentially nullified.