If a firm finds that its marginal cost is greater than its price, it
A. Should increase production.
B. Is maximizing its profit.
C. Is maximizing its total revenue.
D. Should reduce production.
Answer: D
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Refer to the above figure. What are the price and quantity if this monopolist is required to use average cost pricing?
A) P5, Q1 B) P3, Q3 C) P2, Q1 D) P1, Q4
Unemployment
a. usually decreases whenever nominal GDP decreases. b. usually increases whenever real GDP decreases. c. usually decreases whenever nominal GDP increases. d. usually increases whenever the price level increases.
Use the aggregate expenditures model and assume the marginal propensity to consume (MPC) is 0.90 . An increase in government spending of $1 billion would result in an increase in GDP of:
a. $0. b. $0.9 billion. c. $1.0 billion. d. $9.0 billion. e. $10.0 billion.
There can be an opportunity for covered interest arbitrage if:
a. the interest rate is low and the exchange rate is high. b. the forward/spot rate difference is either larger or smaller in percentage terms than the difference in the interest rates on two currencies. c. there is a time lag on the settlement of the transactions. d. the interest rate is high and the exchange rate is low.