Suppose that a monopolistically competitive market is in its long-run equilibrium. If the market demand curve shifts to the left due to a recession:
A. the number of firms in the market decreases in the short run.
B. some firms may earn negative profits in the short run.
C. firms' average costs of production decreases as they decrease output levels in the short run.
D. None of these
Answer: B
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Which of the following would be classified as a fixed cost for the local supermarket?
A) The cost of the boxes of cereal sold in the store. B) The salary and any overtime paid the store's manager. C) The rent from the six-year lease for the building the store uses. D) The Social Security tax the store pays the federal government on the workers' income.
Which of the following would likely be involved in a new bond offering?
A) a commercial bank B) an investment bank C) a broker D) a dealer
Refer to the above figure. Suppose the equilibrium moves from E' to point E. An event that could have caused this movement is
A) an increase in the real interest rate in the United States. B) an increase in U.S. productivity. C) an increase in the perceived stability of the U.S. economy. D) an increase in demand for Japanese-produced goods by U.S. residents.
When a government runs a deficit
A. it must cut spending. B. its debt increases. C. it must raise taxes D. its debt decreases.