For policymakers, the problem with a recessionary gap is ________ and the problem with an expansionary gap is ________.
A. a tendency for inflation to increase; wasted resources
B. an increase in cyclical unemployment; an increase in structural unemployment
C. wasted resources; a tendency for inflation to increase
D. an increase in structural unemployment; an increase in cyclical unemployment
Answer: C
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Suppose Always There Wireless serves 100 high-demand wireless consumers, who each have a monthly demand curve for wireless minutes of QdH = 200 - 100P, and 300 low-demand consumers, who each have a monthly demand curve for wireless minutes of QdL = 100 - 100P, where P is the per-minute price in dollars. The marginal cost is $0.25 per minute. Suppose Always There Wireless charges $0.25 per minute. If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers, what are the profits from sales to each of the low-demand consumers?
A. $9.38 B. $28.13 C. $153.13 D. $1.00
Sweet Husks is a perfectly competitive corn farm. Currently, the expected price of an ear of corn is $0.20 and, at its current production level, Sweet Husks has a marginal cost of $.20 per ear. Which of the following is true regarding Sweet Husks?
A) To maximize expected profit, Sweet Husks should increase production. B) To maximize expected profit, Sweet Husks should decrease production. C) To maximize expected profit, Sweet Husks should double production. D) Sweet Husks is maximizing expected profit.
The reason that the multiplier is smaller if there are variable taxes is that
a. taxes add to government spending, which increases income. b. people get angry about taxes and decide to work less. c. tax increases shift the expenditure line upward. d. part of an increase in income is taken away in taxes.
If the Fed purchases government securities from commercial banks, the reserves of the banking system will immediately
A) increase by the amount of the purchase. B) increase by more than the amount of the purchase. C) remain constant. D) decrease by the amount of the purchase. E) decrease by more than the amount of the purchase.