The aggregate demand curves in Figure 13.1 have a positively-sloped portion. The reason this can happen is ________
A) sloppy editing
B) the monetary policy response to declining inflation causes the real interest rate to fall, which causes output to rise
C) a sudden increase in potential output
D) changes in expected inflation cause the real interest rate to change in the opposite direction
E) rising inflation causes financial frictions to increase
D
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Voters may be rationally ignorant about political issues because they:
a. don't realize how much they benefit from voting b. underestimate the effect of their one vote c. believe that the cost of gaining the information is greater than the benefit of having the information d. all of the above
Which of the following statements is not correct?
a. Fixed costs are constant. b. Variable costs change as output changes. c. Average fixed costs are constant. d. Average total costs are typically U-shaped.
You are the manager of a monopoly that faces an inverse demand curve described by P = 200 ? 15Q. Your costs are C = 15 + 20Q. The profit-maximizing price is:
A. $110. B. $20. C. $290. D. $135.