An economic system in which relative prices change to reflect changes in supply and demand for different commodities is known as a
A) socialist system.
B) communist system.
C) queuing system.
D) market system.
D
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The ability of a central bank to set monetary policy instruments is
A) political independence. B) goal independence. C) policy independence. D) instrument independence.
The central idea distinguishing the "efficiency wage model" is that the wage paid by Firm A relative to the wages at other firms helps determine
A) Firm A's demand for labor. B) the amount of labor Firm A can hire. C) the productivity of Firm A's workers. D) Firm A's markup fraction.
If a restaurant in a summer tourist area is highly profitable during the summer months but unable to cover even its variable costs during the winter months, the restaurant should
a. go out of business immediately, because no firm should continue to operate if it is losing money; doing so is contrary to the idea of profit maximization. b. go out of business as soon as the summer is over; losses should never be tolerated. c. operate during all months of the year as long as its profits during the summer exceed its losses during the winter. d. shut down during the winter, but continue operating during the summer as long as the summer profits exceed the losses (fixed costs) during the winter shutdown period.
In the short run with predetermined prices, when output is less than aggregate expenditure, firms will:
A. reduce production. B. decrease aggregate expenditure. C. increase aggregate expenditure. D. increase production.