Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential
B. recessionary; higher; potential
C. recessionary; lower; lower
D. expansionary; higher; higher
Answer: A
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Assume that you know the following cost information about Fred's widget company: Its fixed cost is $9, and its total variable cost is $6 for 1 unit; $11 for 2; $ 15 for 3; 20 for 4; and 26 for 5 . Given the above information, a. the marginal cost of providing the second unit is $5. b. the total cost of producing 4 units is $29
c. the average total cost of producing five units is $7. d. all of the above are true.
Suppose that technological advancements stimulate $20 billion in additional investment spending. If the MPC = .6, how much will the change in investment increase aggregate demand?
A. $12 billion B. $20 billion C. $50 billion D. $33.3 billion
Protecting intellectual property rights:
A. encourages research and development. B. will increase total surplus for society. C. gives no incentive to innovate. D. only benefits producers in society.
The market demand in a Bertrand duopoly is P = 15 ? 4Q, and the marginal costs are $3. Fixed costs are zero for both firms. Which of the following statement(s) is/are true?
A. P = $10 B. P = $15 C. P = $3 D. None of the answers is correct.