If the economy is represented in the graph shown and is currently at point E3, then the economy must be in:
A. a recession.
B. an economic boom.
C. an economic recovery.
D. long-run equilibrium.
Answer: D
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In a business cycle, the period following a trough is called an expansion
Indicate whether the statement is true or false
Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate. What happens to quantity of money demanded if the interest rate increases?
a. It increases. b. It decreases. c. It does not change. d. Uncertain-the law of demand does not apply to money.
A country has a comparative advantage over another in the production of gadgets if it can produce
A. more gadgets than can the other country. B. more gadgets than can any other country. C. gadgets more efficiently than it can produce any other good. D. gadgets at lower opportunity cost than can the other country.
If individual firms face a horizontal demand curve at a given market price:
A. price is equal to average total cost. B. price is equal to marginal cost. C. price is equal to marginal revenue. D. price is equal to average variable cost.