Assume an auto firm's factories are capable of producing both large and small cars and are operating at full capacity. Assume the price of large cars increases due to a shift in consumers' preferences toward large cars and away from smaller cars
What would reasonably be expected to happen to the equilibrium price and quantity of the firm's small cars? A) Equilibrium price would increase and equilibrium quantity would decrease.
B) Equilibrium price and quantity would both decrease.
C) Equilibrium price would decrease and equilibrium quantity would increase.
D) Equilibrium price and quantity would both increase.
B
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A political candidate promises voters more funding for AIDS research and child care and assures them they will not have to sacrifice any other goods or services to obtain the additional programs.
A. This may be possible if the economy has unemployed resources. B. This is possible only in a fully employed economy. C. This is possible if the economy is producing on its production possibilities curve. D. None of the choices are possible.
If the MRP of labor in a firm is $67, and the MLC equals $56, what would you advise the firm to do?
a. Stay at its current output level. b. Hire additional workers. c. Raise prices. d. Reduce employment. e. Reduce the wage rate.
One reason the oversimplified multiplier is incorrect is that inflation
A. increases the multiplier by increasing investment spending. B. increases the multiplier by increasing consumer spending. C. decreases the multiplier by increasing net exports. D. decreases the multiplier by decreasing consumer spending.
The nominal rate of interest = _____ + _____.
Fill in the blank(s) with the appropriate word(s).