When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand
B. increase; raise; decline
C. decline; lower; decline
D. decline; raise; decline
Answer: B
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Why should a firm not produce more than the rate of output at which marginal revenue equals marginal cost?
What will be an ideal response?
Which of the following is most important if the living standards of people residing in a country are going to improve?
a. growth of population b. growth of per capita GDP c. growth of the money supply d. growth of government expenditures as a share of GDP
Suppose that you open your own business and earn an accounting profit of $40,000 per year. When you started your business, you left a job that paid you a $25,000 salary annually. Also, suppose that you invested $70,000 of your own funds to start up your business. If the normal rate of return on capital is 5 percent, your economic profit is
A. -$55,000. B. -$11,500. C. $15,000. D. $11,500.
Sally's Sandwiches produces sandwiches using one variable input-labor. Sally's Sandwiches is a ________ in the labor market and a ________ in the sandwich market.
A. producer; consumer B. producer; producer C. consumer; producer D. consumer; consumer