Which of the following statements best characterizes the Keynesian view of business cycles?
A. Fluctuations in business activity occur in regular and predictable patterns that cannot be altered.
B. Business cycles are symptoms of underlying problems and should be dealt with through activist government policies.
C. Fluctuations in business activity are to be expected and should be accepted just as changes in the seasons are accepted.
D. The appropriate macroeconomic policy can easily eliminate all fluctuations in business activity.
Answer: B
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Refer to Table 4-6. The table above lists the marginal cost of polo shirts by Marko’s, a firm that specializes in producing men’s clothing. What will happen if the price of polo shirts decreases from $15 to $10?
A) consumers will buy no polo shirts.
B) the marginal cost of producing the third polo shirt will increase to $25.
C) producer surplus will fall from $13 to $3.
D) there will be a shortage of polo shirts.
Which of the following is a potential result of a price ceiling?
A) excess supply B) long lines C) higher quality output D) higher marginal costs
If a firm located outside of China violates China's Anti-monopoly Law, China ________ prosecute the firm ________.
A) cannot; if the firm's behavior affects the markets within China B) can; if the firm's behavior affects the markets within China C) can; regardless of whether or not the firm's behavior affects the markets within China D) cannot; regardless of whether or not the firm's behavior affects the markets within China
One key assumption of the classical model is
A) government spending plays a major role. B) money illusion cannot fool workers. C) wages are sticky. D) prices are sticky.