What does macroeconomic theory predict as the main economic effect of a reduction in the budget deficit?
A. Lower real interest rates
B. A drop in the exchange rate
C. An increase in net exports
D. All of these responses are correct.
Answer: D
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If scientific research produces a technological breakthrough in the production of computer memory, then
a. business costs will increase, profits will fall, and production will decrease. b. business costs will fall, but profits will also fall, and production will decrease. c. business costs will fall, profits will improve, and production will increase. d. profits will increase, allowing businesses to cut back production.
Suppose that a firm uses both labor (L) and capital (K) as inputs. The firm's long-run production function is Q = F(L,K) = 8?L?K. The firm has _____ units of capital. If the firm uses an efficient production method and hires _____ workers, it can produce _____ units of output.
A. 100; 100; 1,200 B. 100; 225; 800 C. 225; 100; 1,200 D. 225; 225; 1,000
Suppose you purchase shares in Acme Gadget Company for $10 per share. The company believes there is a 20 percent chance it will fail to earn a discounted future profit of $1.85. What is the expected rate of return on your investment?
A. 18.5 percent. B. 20.0 percent. C. 13.5 percent. D. 14.8 percent.
Economic growth can be pictured in a production possibilities curve diagram by
A) making the production possibilities curve more bowed out. B) making the production possibilities curve less bowed out. C) shifting the production possibilities curve out. D) shifting the production possibilities curve in.