Which would be a normative economic statement?
a. Retail sales were flat last month and continue on their downward trend
b. Prices are increasing at a rate of 3 percent a year
c. This administration should raise taxes to pay for childcare programs
d. The poverty rate hit a new high last year
Ans: c. This administration should raise taxes to pay for childcare programs
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If the quantity of real GDP demanded is less than the quantity of real GDP supplied, then
A) the economy must be producing at potential GDP. B) the price level falls and firms decrease production. C) the price level falls and firms increase production. D) the price level rises to restore the macroeconomic equilibrium. E) aggregate demand changes to restore the equilibrium.
What reason do economists believe that megabanks are forming?
A) Megabanks enable economies of scale in information processing which allows them to better serve their customers. B) Megabanks create economies of scale which allow the banks to make riskier investment and increase profits. C) Megabanks can compensate for their economies of scale by diversifying into many countries. D) Megabanks allow investors more opportunities and have continued to grow by using their economies of scale to overwhelm their competition.
Explain why the marginal cost curve intersects a U-shaped average cost curve at its minimum point
What will be an ideal response?
The price elasticity of demand between milk and soda is likely to be
a. negative, because the goods are complements b. positive, because the goods are complements c. negative, because the goods are substitutes d. positive, because the goods are substitutes e. 0, because the goods are not usually consumed by the same person at one time