Which of the following does not describe a characteristic of short-term economic fluctuations?
A. Expansions and recessions are irregular in length and severity.
B. Durable-goods industries are less sensitive to short-term fluctuations than service and non-durable industries.
C. Expansions and recessions are felt throughout the economy.
D. The unemployment rate rises during recessions.
Answer: B
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Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
Prior-to-trade (autarky) consumer surplus equals area(s)
A. A + B + C. B. E + F. C. A + B. D. A.
If a firm wants to finance a new project, it can obtain financing by
A) using its retained earnings. B) issuing and selling new shares of stock. C) selling corporate bonds to the public. D) all of the above.
Assume that the economy is in a recession and consumers are expecting a fall in their income levels. This will cause a(n):
A) left shift in the market demand for all goods. B) right shift in the market demand for all goods. C) increase in the total quantity demanded of all goods. D) decrease in the total quantity demanded of all goods.
The above payoff matrix shows the economic profits (in millions of dollars) of two firms in a duopoly that have agreed to a cartel agreement to restrict their output and set their prices equal to the monopoly price
Assuming the game is played once, the equilibrium outcome is where A) both choose the monopoly price. B) both choose the competitive price. C) firm A chooses the monopoly price and firm B chooses the competitive price. D) firm B chooses the monopoly price and firm A chooses the competitive price.