Which of the following contributes most to the fluctuations of growth and decline that characterize business cycles?
a. consumption
b. investment
c. government purchases
d. next exports
b. investment
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Total economic profit is
A) total revenue minus total opportunity cost. B) total revenue divided by total cost. C) marginal revenue minus marginal cost. D) marginal revenue divided by marginal cost.
Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the GDP Price Index and reserves account in the context of the Three-Sector-Model? a. The GDP Price Index falls and reserves account becomes more positive (or less negative)
b. The GDP Price Index falls and reserves account remains the same. c. The GDP Price Index and reserves account remain the same. d. The GDP Price Index rises and reserves account remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The government raises the marginal income tax rates so that after-tax wages are decreased. This most likely will shift the labor
A. demand curve to the right. B. supply curve to the left. C. supply curve to the right. D. demand curve to the left.
If the government requires a natural monopoly to price at marginal cost:
a. monopoly firms will earn zero economic profits because the price of the good equals the cost of producing that good. b. monopoly firms will operate at a loss because P < AC. c. more firms will be able to enter the market. d. producer surplus will increase because quantity supplied is greater.