Total cost divided by the quantity of output the firm chooses when it can choose a production facility of any size describes:
A. the short-run average cost of production.
B. the long-run average cost of production.
C. the short-run marginal cost of production.
D. the long-run marginal cost of production.
Answer: B
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Given the U.S. price level P, the foreign country price level P*, and the nominal exchange rate E expressed in foreign currency per U.S. dollar, the real exchange rate RER is given by
A) RER = E × (P/P*). B) RER = E × (P*/P). C) RER = (P/P*) / E. D) RER = P / (E/P*).
Which of the following statements is TRUE about taxes?
A) Taxes always create more deadweight loss than do price ceilings and price floors. B) Taxes decrease both consumer surplus and producer surplus while creating a deadweight loss. C) Government revenue from a tax is always greater than the loss of producer surplus and consumer surplus. D) Both answers A and C are correct.
The Federal Reserve econometric model estimates that a 1 percent increase in the money supply will
A) increase real GDP by 1 percent after 3 years. B) increase real GDP by 2 percent in 3 years. C) increase real GDP by 3 percent 3 years. D) have no effect on real GDP after 2 years.
Permanent tax changes have a _____ effect on aggregate demand compared to temporary tax changes
Fill in the blank(s) with correct word