In the Keynesian model, consumption depends on:
A. the natural rate of unemployment.
B. potential output.
C. disposable income.
D. whether the government has a budget surplus or deficit.
Answer: C
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For a perfectly competitive firm, any price below its minimum AVC is a
A) market price. B) shutdown price. C) profit maximizing price. D) negative price.
The investment demand curve shows the amount businesses spend for investment goods at different possible:
a. price levels. b. levels of GDP. c. rates of interest. d. levels of taxation.
Answer the following statement(s) true (T) or false (F)
1. To know if the addition of a worker will add to a firm’s profits you must know both the marginal revenue product and the marginal resource cost. 2. Marginal revenue product is calculated by multiplying the marginal product times the marginal resource cost. 3. The equilibrium wage (W*) is the median cost of labor, with half of the workers making more and half making less. 4. The substitution effect describes the tendency of workers at a low wage rate to have a high rate of absenteeism. 5. If the substitution effect is stronger than the income effect, the individual’s labor supply curve is backward bending.
Under the gold standard, if a country had a deficit in its balance of payments, it would have to:
A. sell gold in order to keep the value of its currency from rising. B. buy gold in order to keep the value of its currency from rising. C. sell gold in order to keep the value of its currency from falling. D. buy gold in order to keep the value of its currency from falling.