A shift away from expenditures on domestic goods and a shift toward expenditures on foreign goods when the domestic price level increases is known as
A. the open economy effect.
B. demand side inflation.
C. the real-balance effect.
D. the interest rate effect.
Answer: A
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During recessions, the value of collateral decreases and corporate profits decrease, so firms do not have cash to finance new investment projects. Therefore, credit rationing depends on the state of the economy. This situation is known as the
A) risk acceptance cost. B) lender's dilemma. C) default premium. D) financial accelerator.
The concept of diminishing marginal utility:
A. explains why individuals rarely maximize their total utility. B. is the change in total utility that comes from consuming one additional unit of a good or service. C. is the principle that the additional utility gained from consuming successive units of a good or service tends to be smaller than the utility gained from the previous unit. D. is the principle that the additional utility gained from consuming different bundles of goods and services tend to be smaller than the utility gained from consuming just one bundle of goods and services.
Expansionary monetary policy:
A. lowers interest rates, increasing investment and decreasing net exports. B. raises interest rates, raising both investment and net exports. C. lowers interest rates, increasing both investment and net exports. D. raises interest rates, decreasing both investment and net exports.
Suppose that the profit maximizing level of output for the monopolist is 100 units, and ATC = $45.00; MC = $35.00; MR = $35.00; P = $60.00. What is the monopoly's profit?
A) -$1000 B) $4500 C) $5000 D) $1500