Advocates of stabilization policy argue that when there is a recession, the government should increase the money supply and increase government expenditures.

If the shutdown rule, p < AVC, is the same in the short run and the long run, explain why the shutdown prices may be different

What will be an ideal response?

Which tool do economists use to determine the effect of an economic event on equilibrium price and quantity?

a. equilibrium price b. the four-step process c. demand schedule d. supply schedule

Which of the following would most likely decrease the current demand for DVD players?

a. an increase in consumer income b. an increase in the prices of television sets, a complement for DVD players c. an expectation that the price of DVD players would rise sharply in the near future d. an increase in the price of VCRs, a substitute for DVD players

Which of the following statements is TRUE?

A) No economic model captures every detail that affects a problem. B) Economic models always make accurate predictions about behaviors. C) Economic models must fully reflect reality. D) Economic models use economists' opinions with no use of data.