In the long run, a monopolistically competitive firm’s demand curve must be tangent to its average cost curve.
Answer the following statement true (T) or false (F)
True
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If the economy is in an equilibrium with real GDP less than potential GDP, a fiscal stimulus could move the economy toward potential GDP by simultaneously ________ taxes and ________ government expenditures on goods and services
A) raising; increasing B) raising; decreasing C) cutting; increasing D) cutting; decreasing E) raising; not changing
Open market purchases of bonds by the Federal Reserve eventually
a. reduce the pressures on bond markets b. increase real GDP c. lead to open market sales of bonds d. increase the interest rate e. encourage tax increases
Frictional unemployment is a sign of a healthy economy because
A. workers become more productive after taking vacations. B. economic growth remains steady. C. workers seek labor where they can provide the most value to their respective employer. D. wages fall, which forces workers to compete.
Aggregate supply shocks are:
A. the results of fiscal policy actions. B. inflation shocks or shocks to potential output. C. the results of monetary policy actions. D. the results of structural policy actions.