Given the path of natural real GDP growth, economists prefer an economy such as ________, in which the real GDP gaps are ________
A) Stabilia's, minimized
B) Stabilia's, maximized
C) Volatilia's, minimized
D) Volatilia's, maximized
A
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Marginal cost is equal to the
A) change in total cost divided by the change in output. B) change in average total costs divided by the change in output. C) change in average product divided by the change in output. D) change in total product divided by the change in output.
People consistently consider sunk costs when weighing the trade-offs involved in a decision because:
A. they are rational. B. they are utility-maximizers. C. they think at the margin. D. they find it hard to accept their losses.
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
If real GDP and aggregate expenditure are greater than equilibrium expenditure, what happens to firms' inventories? How do firms change their production? And what happens to real GDP?
What will be an ideal response?