In the short run a decrease in the costs of production makes
a) output rise and prices fall.
b) output and prices fall.
c) output and prices rise.
d) output fall and prices rise.
Ans: a) output rise and prices fall.
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In the classical model, the level of business investment was a function of
a. only the expected profitability of investment projects. b. only the real interest rate. c. both the expected profitability of investment projects and the real interest rate. d. only the nominal interest rate. d. None of the above
Member countries of the Eurosystem agree to:
A. pursue independent domestic monetary policies based on what is best for their own country, but not all member countries have adopted the euro as their currency. B. share a common monetary policy and use the euro as their currency. C. use the euro as their currency, but each country still pursues an independent monetary policy. D. share a common monetary policy and fiscal policy.
Choose the letter below that best represents the type of shift that would occur in the following situation in the United States: OPEC raises the price of its oil significantly. (See Figure 8.6.)
A. A. B. B. C. C. D. D.
When an input represents a larger proportion of a firm's total costs, then
A) demand for the input will tends to be less elastic. B) the input demand will not vary significantly with a change in input price. C) the usage of the input cannot be varied in the production function. D) demand for the input will tends to be more elastic.