Figure 11-1
In Figure 11-1, to reach the level of potential GDP, the administration of President Obama would most likely advocate
a.
increasing Social Security payments.
b.
decreasing defense spending.
c.
decreasing personal income taxes.
d.
All of the above are correct.
a
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An industry analyst observes that in response to a small increase in price, a competitive firm's output sometimes rises a little and sometimes a lot. The best explanation for this finding is that
A) the firm's marginal cost curve is random. B) the firm's marginal cost curve has a very small positive slope. C) the firm's marginal cost has a very large positive slope. D) the firm's marginal cost curve is horizontal for some ranges of output and rises in steps. E) the firm's marginal cost curve is downward sloping.
Samantha has been working for a law firm and earning an annual salary of $90,000 . She decides to open her own practice. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Samantha will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which
she was earning annual interest of $1,000 . Assuming that there are no additional expenses, Samantha's annual implicit costs will equal a. $55,200 b. $221,400 c. $91,000 d. $146,200 e. $145,200
Whether or not a production process shows economies of scale depends on
a. the number of inputs used. b. technology. c. technology and input prices. d. technology and output prices.
Scarcity is illustrated graphically by a production possibilities frontier.
Indicate whether the statement is true or false.