An economic variable that moves in the same direction as aggregate economic activity (up in expansions, down in contractions) is called
A) procyclical.
B) countercyclical.
C) acyclical.
D) a leading variable.
A
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A large open economy's real interest rate will decrease if
A) the expected future marginal product of domestic capital rises. B) the expected future marginal product of foreign capital rises. C) there is a temporary positive domestic supply shock. D) there is a temporary negative domestic supply shock.
Optimal decisions are made on the basis of
A. rate of growth in total profit. B. average cost and average revenue figures. C. impact on market share. D. marginal cost and marginal revenue figures.
The rational expectations hypothesis is based on the assumption that
A) individuals combine effects of past policy actions with their own judgment about future policy effects and changes when forming their expectations. B) individuals adapt in response to past policy actions and changes without looking ahead when forming their expectations. C) firms pay above equilibrium wages to their employees. D) most firms operate in a less than competitive environment.
The market demand curve for a good is found by
a. adding up the quantities demanded by all consumers at different prices of that good b. adding up the quantities demanded by all consumers at different incomes c. adding up the maximum price each consumer is willing to pay for each possible quantity of the good d. varying consumers' total income and determining what prices they are willing to pay e. vertically summing the individual consumers' demand curves