The automatic stabilizers in the U.S. economy are sufficiently strong to prevent recessions
a. True
b. False
Indicate whether the statement is true or false
False
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When the FOMC raises the federal funds rate, almost immediately ________, and a few weeks later the ________
A) short-term interest rates fall; quantity of money and supply of loanable funds decrease B) long-term interest rates rise; quantity of money and supply of loanable funds increase C) long-term interest rates rise; quantity of money and supply of loanable funds decrease D) short-term interest rates rise; quantity of money and supply of loanable funds decrease E) short-term interest rates fall; quantity of money and supply of loanable funds increase
If at the prevailing interest rate the demand for money is $3 trillion, and the supply of money is $2.5 trillion, then which of the following is true?
a. There is excess money supply, interest rates must fall in order to achieve an equilibrium in the money market. b. There is a shortage of money, interest rates must fall in order to achieve an equilibrium in the money market. c. There is a shortage of money, interest rates must rise in order to achieve an equilibrium in the money market. d. There is excess money supply, interest rates must rise in order to achieve an equilibrium in the money market.
A competitive industry consists of 100 firms. The short-run marginal cost curve for each firm is given by MC = 200 + .3Q. The demand curve faced by the industry is given as P = 400 - .1Q. How much profit is each firm making if fixed costs are $375 per firm?
What will be an ideal response?
Suits Only, a dry cleaning firm that specializes in cleaning business suits, operates in a perfectly competitive market. Robin Smith, an exceptionally talented manager, has been hired to manage Suits Only. In the dry cleaning business, a manager typically makes a salary of $400 per week. Suits Only faces the long-run average and marginal costs shown in the figure below. In long-run competitive equilibrium, the market price for cleaning a business suit is $4.50.
Given the above, if Robin Smith buys Suits Only and continues to manage it herself, she will
A. earn $75 in economic rent per week. B. earn zero economic profit. C. earn $75 in economic profit each week. D. both a and b.