Suppose a firm experiences lower average costs whenever output increases in the long run. Then we would expect the firm to have:
A. a U-shaped long-run average cost curve.
B. an L-shaped long-run average cost curve.
C. a long-run average cost curve that always decreases.
D. a minimum efficient scale relatively close to the origin.
Answer: C
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The quantity theory of money assumes a constant ratio of ________
A) money demand to money supply B) money supply to nominal GDP C) money supply to real GDP D) real GDP to nominal GDP
Reserves are ________
A) gold in a bank's vault plus its gold at Federal Reserve banks B) cash in a bank's vault plus its deposits at Federal Reserve banks C) cash in a bank's vault plus its gold at Federal Reserve banks D) cash in a bank's vault plus the cash carried by its customers
A monopolistically competitive firm is similar to
A) a monopoly in the short run because it can make an economic profit in the short run and is similar to a perfectly competitive firm in the long run because it cannot make a positive economic profit. B) a perfectly competitive firm in the short run because it cannot make an economic profit in the short run and is similar to a monopoly in the long run because it can make an economic profit. C) a monopoly because it can make an economic profit in both the short run and long run. D) a perfectly competitive firm because its economic profit is equal to zero in both the short run and long run.
In the AS/AD model, the repercussion that a change in aggregate quantity demanded has on production and subsequently on income and expenditures is called the:
A. expenditure effect. B. money wealth effect. C. accelerator effect. D. multiplier effect.