Assume there is a decrease in the market demand for a good sold by price-taking firms that are initially producing the profit-maximizing level of output. How will the market adjust over time?
A) Firms will enter the market, causing price to rise until losses are eliminated.
B) Firms will enter the market, causing price to fall until positive profits are eliminated.
C) Firms will exit the market, causing price to rise until losses are eliminated.
D) Firms will exit the market, causing price to fall until positive profits are eliminated.
C
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Refer to the figure above. What is the optimal number of machines rented if the market rental price is $5 per month?
A) 20 machines B) 40 machines C) 80 machines D) 100 machines
Attempts to fine-tune the economy through counter-cyclical fiscal policy
A) demonstrated their effectiveness in the 1930s. B) demonstrated their effectiveness during World War II. C) demonstrated their effectiveness between 1945 and 1960. D) have not yet demonstrated their effectiveness.
When inflation rises, the nominal interest rate
a. rises, and people desire to hold more money. b. rises, and people desire to hold less money. c. falls, and people desire to hold more money. d. falls, and people desire to hold less money
Assume that Brazil and Mexico have floating exchange rates. All else held constant, if the price level is stable in Mexico but Brazil experiences rapid inflation then ________.
A. the Brazilian real will appreciate B. the Brazilian real will depreciate C. gold bullion will flow into Brazil D. the Mexican peso will depreciate