At some rate of interest, i, domestic demand is equal to output, and at some exchange rate, the domestic return is equivalent to the foreign return. This must be one point on:
A) the IS curve.
B) the aggregate expenditure line.
C) the supply curve.
D) the LM curve.
Ans: A) the IS curve.
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What is a private benefit from consumption? What is a social benefit from consumption? When is the private benefit from consumption equal to the social benefit from consumption?
What will be an ideal response?
As more output is produced, the marginal product of labor declines
A) because of the law of diminishing returns. B) because the firm's marginal revenue declines. C) if the firm's output supply curve is inelastic. D) if firms reduce the wage paid to labor.
The most significant problem in trying to empirically measure the real rate of interest is that
A) there are so many different types of bonds. B) expected inflation is unobservable. C) interest rates fluctuate so much from day to day. D) banks infrequently change the prime rate of interest.
When a random demand and marginal cost are linear, producing the quantity at which the marginal cost equals the ________ maximizes ________.
A) expected marginal revenue; expected profit B) marginal revenue; profit C) marginal revenue; expected profit D) expected marginal revenue; profit