Profit is maximized at the output at which marginal revenue equals marginal cost.
Answer the following statement true (T) or false (F)
True
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Imperfect asset substitutability assumes
A) the returns on foreign and domestic currency bonds are identical. B) the returns on foreign and domestic currency are unrelated. C) the risks of holding foreign and domestic currency are identical. D) the risks of holding foreign and domestic currency are unrelated to returns. E) the returns on foreign and domestic currency differ and are influenced by risk.
The ..., the smaller is the government purchases multiplier
What will be an ideal response?
Without a change in discretionary fiscal policy, we would expect that if the economy goes into recession, then the:
A. Cyclically-adjusted deficit and the actual deficit would both increase B. Cyclically-adjusted deficit and the actual deficit would both decrease C. Cyclically-adjusted deficit would stay the same while the actual deficit would increase D. Cyclically-adjusted deficit would increase while the actual deficit would stay the same