If a firm increases all of its inputs by 10 percent and its output increases by 10 percent, then:
A. it is encountering diseconomies of scale.
B. it is encountering economies of scale.
C. it is encountering constant returns to scale.
D. the marginal products of all inputs are falling.
Answer: C
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When external costs are present,
A) competitive, unregulated markets are efficient. B) transaction costs will be high. C) a tax might be able to create efficiency. D) property rights have already been established.
When future labor income falls in a small open economy, it causes the current account to ________ and investment to ________
A) fall; rise B) rise; remain unchanged C) fall; remain unchanged D) rise; rise
The Taylor Rule provides policymakers with a target for
A) the federal funds rate. B) the discount rate. C) the inflation rate. D) the unemployment rate. E) c and d
Exhibit 4-2 Supply and demand curves
The market shown in Exhibit 4-2 is initially in equilibrium at E3. Changes in market conditions result in a new equilibrium at E4. This change is stated as a(n):
A. increase in demand and an increase in supply. B. decrease in demand and a decrease in quantity supplied. C. increase in supply and an increase in quantity demanded. D. decrease in supply and a decrease in quantity demanded.