The idea that the interaction of the multiplier and accelerator alone generates business cycles supports the view that the economy is
a. dependent on external shocks, such as housing booms, to stimulate investment which triggers the economy into a cycle
b. always moving toward its equilibrium position, albeit not without going through a cyclical path
c. always at full employment because the interaction is a chronic stimulant to the economy
d. always stable, closely following the trend line of economic growth
e. inherently unstable
E
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A pure monopolist is selling 7 units at a price of $12. If the marginal revenue of the 8th unit is $4, then the price of the 8th unit is
A) $10. B) $11. C) greater than $12. D) $4.
This profit-maximizing firm produces a quantity of a little over _______ units.
A. 125.
B. 110.
C. 85.
D. 65.
Ford assembles some cars in Mexico because the lower wages the company pays to Mexican workers and the lower prices it pays for auto parts in Mexico reduces Ford's costs. This is an example of Ford reacting to which of the three key economic ideas?
A) People are rational. B) People respond to economic incentives. C) Optimal decisions are made at the margin. D) Firms attempt to maximize revenues.
Most monetarists blame much of the instability in the economy on
A. big business. B. the World Bank. C. the Fed. D. immigration.