Use a graph to show the effects of an expansionary monetary policy moving an economy out of recession and to potential real GDP. Explain what happens to aggregate demand, real GDP, and the price level
What will be an ideal response?
If the economy is in recession, it is currently at point A, below potential real GDP. An expansionary monetary policy will shift the aggregate demand curve to the right from AD1 to AD2, increasing real GDP and the price level until it reaches potential real GDP at point B.
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Explain why the long-run average cost is typically U shaped.
What will be an ideal response?
Economists assume the central goal of any business is to:
A. maximize revenues. B. minimize costs. C. maximize profit. D. maximize market share.
The amount that a hospital will be paid for treating a Medicare patient is determined
a. before the patient ever sees a physician. b. at the time of admission to the hospital. c. at the point when the diagnosis is made. d. after medical services are provided. e. after the hospital bill is reviewed by Medicare auditors.
Which of the following changes in disposable income would lead to the greatest increase in consumption?
a. a $20,000 increase in disposable income, if MPC equals 0.5 b. a $12,000 increase in disposable income, if MPC equals 0.75 c. a $15,000 increase in disposable income, if MPC equals 0.6 d. a $30,000 increase in disposable income, if MPC equals 0.25