What term is used to denote costs that rise and fall depending on the rate of production?
a. implicit costs
b. variable costs
c. average costs
d. fixed costs
b. variable costs
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The ________ of the term structure states the following: the interest rate on a long-term bond will equal an average of short-term interest rates expected to occur over the life of the long-term bond plus a term premium that responds to supply and
demand conditions for that bond. A) segmented markets theory B) expectations theory C) liquidity premium theory D) separable markets theory
During the 1970s and 1980s, macroeconomists were busy integrating the insights of which of the following into their ideas about the economy?
A) real business cycle theory B) Keynesian theory C) supply side economics D) classical macroeconomics E) none of the above
When a good is illegal, the supply curve is likely to be inelastic because
A. the difficulty of expanding operations as price rises because of the increased likelihood of capture. B. extra costs associated with avoiding capture. C. the ease of finding new buyers without getting caught. D. the ease with which sellers can expand operations into new territory when price rises.
Monetarists argue that when expansionary fiscal policy is financed through borrowing:
A. Monetary policy becomes tight B. Private investment spending will be crowded out C. The demand for money and interest rates both decrease D. The investment demand curve becomes relatively steep