Which of the following is true?
a. The production possibilities curve indicates that it will be impossible to expand total output with the passage of time.
b. As long as resources are scarce, output cannot be increased.
c. The size of the economic pie is fixed, and therefore, if one individual has more income, others must have less.
d. Over time, the output of goods and services can be increased through human ingenuity and discovery of better ways of doing things.
d
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If the exchange rate is 12.5 pesos per U.S. dollar, it is also 1/12.5 U.S. dollars per peso
a. True b. False Indicate whether the statement is true or false
According to the Taylor rule, if actual output is greater than the natural rate of output, then the Fed should
a. decrease inflation. b. increase interest rates. c. conduct open market sales. d. decrease interest rates. e. Both a and b
The fact that barriers to entry are low in competitive price-searcher markets means that if current firms are making economic losses,
a. these losses will remain in the long run because no firms can exit the market. b. current firms will exit the market, causing the demand curves that face the remaining firms to increase. c. new firms will enter the market, causing the demand curves that face the existing firms to decrease. d. new firms will enter the market, causing no change in the demand curves that face the existing firms in the market.
The link between corporate profits and investment
a) results from heavy reliance on internal financing b) indicates that cash flow is probably the key variable driving investment c) is the strongest empirical evidence of Tobin’s q d) explains the persistent drop in investment that occurred throughout the 1990s e) helps to keep investment fairly stable and countercyclical