In the long run, firms in a competitive market
A) shut down because profit goes to zero.
B) lose money.
C) are not profit maximizing.
D) earn zero economic profit.
D
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A graph shows the average wage of various demographic groups in 2012. The kind of graph used to show these data would be a
A) scatter diagram. B) time-series graph. C) cross-section graph. D) Venn diagram. E) fixed-year figure.
The SAS curve and the LAS curve
A) intersect at potential GDP. B) are parallel at potential GDP. C) are perpendicular to one another at potential GDP. D) None of the above answers is correct.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Refer to the figure above. Which of the following statements is true when the credit demand curve is CD1 and the credit supply curve is CS1?
A) At all rates of interest above 3% there will be a tendency for real interest rates to fall. B) At all rates of interest above 4% there will be a tendency for real interest rates to fall. C) At all rates of interest above 2% there will be a tendency for real interest rates to fall. D) At all rates of interest above 1% there will be a tendency for real interest rates to fall.