If average cost is decreasing,
A) marginal cost equals average cost.
B) marginal cost exceeds average cost.
C) marginal cost is less than average cost.
D) Not enough information is provided.
C
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
If a product is a normal good, then its income elasticity of demand is
A) zero. B) positive. C) negative. D) indeterminate. E) greater than 1.
When the money market is drawn with the value of money on the vertical axis, if the price level is below the equilibrium level, there is an
a. excess demand for money, so the price level will rise. b. excess demand for money, so the price level will fall. c. excess supply of money, so the price level will rise. d. excess supply of money, so the price level will fall.
A member in a cartel can earn more profits by
A) charging a slightly lower price and raising production. B) producing less than the agreed rate. C) selling less than the agreed amount. D) none of the above.