If potential output equals 4,000 and short-run equilibrium output equals 3,500, there is a ________ gap and the Federal Reserve must ________ real interest rates in order to close the gap.
A. expansionary; raise
B. recessionary; not change
C. recessionary; reduce
D. recessionary; raise
Answer: C
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Answer the following statements true (T) or false (F)
1) In a Cournot oligopoly, the total profit is less when two firms compete compared to the cartel profits. 2) The more firms in a Cournot oligopoly, the greater the profits for each firm. 3) As the number of firms in a Cournot oligopoly increases, the equilibrium quantity gets closer and closer to the monopoly quantity. 4) In a Cournot oligopoly, if a firm's marginal cost is not constant, its best-response curve will not be linear. 5) In a Stackelberg oligopoly, the follower second firm determines its production from its Cournot best-response function.
In long-run monopolistic competition,
a. economic profit is zero b. P = MC = ATC c. P = ATC at the minimum point on the ATC d. normal profit is zero e. the demand curve is tangent to the MC curve
Unfair advertising practices are investigated by the Federal Trade Commission.
Answer the following statement true (T) or false (F)
Whenever the economy is producing the maximum amount of goods given the level of technology and the amount of resources
A) the number of resources used should be decreased since society must protect its scarce resources. B) the concept of opportunity costs does not exist. C) more goods will be available than customers want to buy. D) the economy is producing efficiently.