Suppose a pizza restaurant has two pizza ovens that may be used to bake pizzas, so the restaurant has a maximum capacity constraint that affects the shape of the firm's short-run marginal cost curve
What happens to maximum capacity segment of this curve if the firm adds another pizza oven? A) Shifts upward
B) Shifts downward
C) Shifts leftward
D) Shifts rightward
D
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
"Crowding out" occurs as an expansionary fiscal policy __________ interest rates, thus __________ investment spending
A) raises; increasing B) raises; decreasing C) lowers; increasing D) lowers; decreasing
Assume the Fed initiates an expansionary monetary policy that is correctly anticipated by economic agents in the economy. According to the rational expectation hypothesis, the result is
A) an increased price level in the short run, but no effect on price level in the long run. B) decreased real Gross Domestic Product (GDP) in the short run, but increased real Gross Domestic Product (GDP) in the long run. C) increased real Gross Domestic Product (GDP) and increased employment in the long run. D) an increased price level, but no change in real Gross Domestic Product (GDP) in the long run.
Successful collusion requires all of the following except
a. a monopoly market with strong barriers to entry b. all firms cooperate, none cheat c. all firms belong to the same industry d. collusion will be more profitable than non-collusion e. the government does not interfere