How will firms react when they discover that their actual investment is less than their intended investment? How will their reaction affect equilibrium national income?
This signals that their inventories unexpectedly fell, so they will be happy. They will respond by hiring
more resources in order to produce more output. With more workers producing goods and services and
earning incomes, national income will rise.
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The maximum amount of other goods and services that people are willing to give up in order to get one more unit of a good is defined as the good's
A) marginal benefit. B) total benefit. C) marginal cost. D) total cost. E) price.
According to the real business cycle theory, what is the principal cause of business cycle fluctuations?
What will be an ideal response?
It makes sense for Wendy's to advertise its new menu that allows customers to choose fruit or salad as a substitute for French fries in its values meals, as long as doing so raises:
A. revenue by less than the cost of advertising. B. costs. C. revenue by more than it raises the cost of advertising. D. any revenue at all.
In Operation Desert Storm, oil facilities in Iraq were attacked amid strong demand for oil. In response, political pressure motivated OPEC to increase the daily quota by 2 million barrels a day. Assuming demand did not change, which of the following series of prices most likely matches how the price of a barrel of oil changed from (1) before the attack, to (2) just after the attack, to (3) after OPEC increased the quota?
A. $40, $42, $38 B. $42, $38, $40 C. $38, $40, $42 D. $42, $40, $38