An inflationary gap exists when consumers
a. are saving more than businesses are investing.
b. and businesses are purchasing less than the economy is capable of producing.
c. and businesses are demanding more than the economy is capable of producing.
d. and businesses are demanding less than the full employment level of output.
c
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Refer to Table 23-4. Given the consumption schedule in the table above, the marginal propensity to save is
A) 0.3. B) 0.4. C) 0.5. D) 0.6.
In deriving the demand schedule for a good, economists assume that
A) consumers have equal incomes to allocate among goods. B) a consumer will allocate all of her income to one good. C) all other influences on demand except the product price are held constant. D) reported income changes at each point on the demand schedule.
When a firm's demand fluctuates randomly,
A) no profit can be earned on the inventory. B) the optimal inventory maximizes the profit of the inventory. C) the profit-maximizing inventory is found where the expected marginal benefit exceeds the expected marginal cost. D) managers cannot use marginal analysis to determine the optimal inventory.
Which of the following is FALSE about firms organized along functional lines?
a. Workers develop functional expertise b. Workers find it difficult to share information within their division c. They foster the exploitation of economies of scale d. None of the above