Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10. In the long run, definitely
A) each firm increases its production above 1,000 units.
B) the number of firms is more than 10,000.
C) consumer surplus decreases.
D) producer surplus increases.
E) the number of firms is less than 10,000.
B
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The interest rate that banks charge one another for the loan of excess reserves is the ________.
A. discount rate B. interest on reserves C. federal funds rate D. prime rate
Accounting profits are typically
A) greater than economic profits because accounting profits do not include explicit costs. B) greater than economic profits because accounting profits do not include implicit costs. C) smaller than economic profits because accounting profits do not include explicit costs. D) equal to economic profits in the long run.
If the value of the marginal propensity to consume (MPC) is 0.90, the value of the spending multiplier is:
a. 10. b. 1.1. c. 90. d. 100.
Between 2007 and 2009, the U.S. unemployment rate rose from under 5 percent to over 8 percent. A Keynesian economist would most likely blame this increase in unemployment on:
A. an increase in the bargaining power of labor unions. B. a decline in the level of aggregate demand. C. a decline in aggregate supply. D. an increase in the minimum wage.