A perfectly elastic supply curve is
A) a straight line that crosses the horizontal axis.
B) a straight line coming out of the origin.
C) a horizontal straight line.
D) a vertical straight line.
Answer: C
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If companies decrease investment spending because of lower expected returns on projects, forecasters should anticipate (everything else the same) that
A) GDP will rise. B) the money supply will fall. C) interest rates will fall. D) saving will increase.
In the short run, a firm should shut down its operation if:
a. its losses are less than TFC at the MR = MC point. b. its losses equal TFC at the MR = MC point. c. its losses are greater than TFC at the MR = MC point. d. TR is less than TC. e. TR exceeds TVC.
Suppose that consumers become more pessimistic about the future and, as a result, reduce their consumption by $10 billion. If the marginal propensity to consume is 0.80, how will this $10 billion reduction in consumption affect the equilibrium level of real GDP?
a. Real GDP will decrease by $8 billion. b. Real GDP will decrease by $10 billion. c. Real GDP will decrease by $40 billion. d. Real GDP will decrease by $50 billion.
Monopolistic competition differs from ________
A. monopoly because firms cannot set their own price B. oligopoly because firms produce differentiated goods or services C. perfect competition because the goods or services produced are diffe-rentiated D. monopoly because the good produced by each firm has no close subs-titute