Why do accountants and economists calculate a firm's cost and profit in different ways?
What will be an ideal response?
Accountants and economists have different reasons for computing a firm's costs. An accountant calculates a firm's cost and profit to ensure that the firm pays the correct amount of income tax and to show its investors how their funds are being used. An economist calculates a firm's cost and profit in a way that enables him or her to predict the firm's decisions.
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Which of the following groups exerts the most control over the money supply in the United States?
a. The executive branch of government b. The legislative branch of government c. The judicial branch of government d. The Federal Reserve e. The U.S. Treasury Department
As entry of new firms occurs in an existing monopolistically competitive industry, the
a. market demand curve will shift to the right b. market demand curve will shift to the left c. demand curves of existing firms shift to the right d. demand curves of existing firms will become more price elastic e. market supply curve will shift to the left
One tenet of classical economics is that
A. the government should set a minimum wage slightly above the natural market equilibrium rate. B. the government should intervene whenever necessary to avoid any unemployment. C. the role of the government should be limited, since the market will always be self-correcting. D. wages and prices are "sticky downward."
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline