Use the following graph for a perfectly competitive firm generating a loss in the short run to answer the next question.
Which area in the graph represents the portion of total cost that the firm can recoup by continuing to produce rather than shutting down?
A. 0cdg
B. acdf
C. 0beg
D. abef
Answer: C
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Commodity-backed money is:
A. money used for the exchange of large commodities. B. money created by rule. C. any form of money that can be legally exchanged into a fixed amount of an underlying commodity. D. any form of money that also has a role as a commodity.
Which of the following generalizations is derived from the economist's framework?
A. Government regulations have the same impact whether they are designed on the basis of cost/benefit analysis or were developed as a reaction to real-world events. B. Policies that relieve immediate suffering often have the best long-run consequences. C. Sound policies often are prevented by individuals' self-interest-seeking activities. D. Politicians always take too long to enact regulations because they must wait for economic advisors to perform a cost/benefit analysis.
Although macroeconomics textbooks have taught the logic of fiscal policy for over half a century, actual use of discretionary fiscal policy has been rare. When President George W. Bush persuaded Congress to enact a large tax cut early in his presidency, it was the first time in several decades that the fiscal policy rationale was taken seriously. Why has fiscal policy been used so infrequently?
A. The political processes of democracy make timely fiscal policy difficult. B. It has inherent conflicts with monetary policy. C. Fiscal policy has proven to be too strong a medicine for the small economic fluctuations we have had. D. Concern about exchange-rate stabilization has limited its effectiveness.
Usually when a monopoly that isn't a natural monopoly is broken up, the losses to the producer outweigh the gains to consumers.
a. true b. false