Which of the following decreases in response to the interest-rate effect from an increase in the price level?
a. both investment and consumption
b. consumption but not investment
c. investment but not consumption
d. neither investment nor consumption
a
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
If a firm has increasing returns to scale at all levels of output, then the
A. marginal cost for the firm declines over the entire range of output. B. average cost for the firm declines over the entire range of output. C. fixed costs of operation diminish to zero. D. production technology is optimized.
Which of the following makes it possible for even a small investor to hold a diverse set of stocks and still keep the cost of purchasing additional stock holdings low?
A) an equity (stock) mutual fund B) a real world savings account C) a bond mutual fund D) a checking account at a local bank
An economy that is operating below its full-employment capacity is experiencing a(n):
A. tax-induced recession. B. recessionary gap. C. inflationary gap. D. market correction.