The law of supply is illustrated by a supply curve that is:
a. Vertical
b. Downward sloping
c. Upward sloping
d. Horizontal
Ans: c. Upward sloping
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Refer to Figure 11-10. Suppose for the past 8 years the firm has been producing Qd units per period using plant size ATC4. Now, following a permanent change in demand, it plans to cut production to Qc units
What will happen to its average cost of production? A) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $41. B) In the short run, its average cost rises from $47 to $55, and in the long run, average cost falls to $37. C) In the short run, its average cost falls from $47 to $37, and in the long run, average cost rises to $41. D) In the short run, its average cost falls from $47 to $41, and in the long run, average cost falls even further to $37.
Suppose that IS and LM intersect at full-employment output. A rightward shift of LM will be followed by a __________ price level that shifts LM to the __________ in a return to full employment
A) rising; right B) rising; left C) falling; right D) falling; left
A decision by Congress to reduce spending in order to balance the government's budget is an example of ________ policy.
A. monetary B. fiscal C. structural D. aggregation
As lumber becomes more expensive
A. the quantity of lumber demanded will increase. B. the equilibrium quantity of new houses will decrease. C. the supply of new houses will increase. D. None of the choices are correct.