Refer to Figure 16.1. If a firm expects that consumer preference for its product will increase in the future, this is best represented by a movement from
A) point A to point C.
B) point B to point A.
C) point A to point B.
D) point C to point A.
C
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Cost-reduction generates
a. Increases in long-run profitability b. Increases in long-run profitability only if the cost reduction is difficult to imitate c. Decreases in long run profitability d. No change in profitability
Suppose the real wage of a worker remains unchanged between Year 1 and Year 2 but the nominal wage decreases from $20 in Year 1 to $18 in Year 2 . This implies that the price level has: a. increased by 20 percent. b. increased by 25 percent. c. remained unchanged
d. fallen by 10 percent. e. fallen by 20 percent.
A restriction on the quantity of a good that can be imported into a country is a(n):
a. tariff. b. quota. c. embargo. d. restricted exchange rate.
Use the aggregate expenditures model and assume an economy is in equilibrium at $6 trillion which is $500 billion above full-employment GDP. If the marginal propensity to consume (MPC) is 0.75, full-employment GDP can be reached if government spending:
a. decreases by $75 billion. b. decreases by $125 billion. c. decreases by $500 billion. d. is held constant.