The possible combinations of goods that can be purchased with a specific income are called the
A. income-consumption curve.
B. marginal rate of substitution.
C. budget constraint.
D. indifference map.
Answer: C
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In the above figure, start with the economy in equilibrium at point A. Then an unanticipated reduction in aggregate demand triggers a shift from AD1 to AD2. In the short run, this would cause
A) the price level to move from P1 to P2, but real Gross Domestic Product (GDP) would stay at Y1. B) the price level to fall from P1 to P2, real Gross Domestic Product (GDP) to fall from Y1 to Y2, and the rate of unemployment to increase. C) the price level to fall by some amount less than P1 but greater than P2, and the rate of unemployment would decrease. D) no change in either the price level or real Gross Domestic Product (GDP), but a decrease in unemployment.
If a country operates on its PPF, it achieves production efficiency
Indicate whether the statement is true or false
Today, U.S. government spending on entitlements represents ________ of the total federal budget
A) about 10 percent B) less than 25 percent C) nearly 60 percent D) nearly 90 percent
In the figure above, the wage rate is $600 and total fixed cost is $15,000. How much output does the firm produce when average variable cost is at its minimum?
A. 375 B. 1,600 C. 270 D. 4,800 E. 30