One tenet of classical economics is that
A) the role of the government should be limited, since the market will always be self-correcting.
B) the government should set a minimum wage slightly above the natural market equilibrium rate.
C) the government should intervene whenever necessary to avoid any unemployment.
D) wages and prices are "sticky downward."
A
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Which of the following statements is true?
A) An increase in potential GDP increases aggregate supply and shifts the AS curve leftward. B) A decrease in potential GDP decreases aggregate supply and shifts the AS curve leftward. C) An increase in the money wage rate shifts the AS curve rightward. D) A fall in the price level shifts the AS curve leftward. E) An increase in the money wage rate increases potential GDP.
The law of diminishing returns refers to diminishing
A) total returns. B) marginal returns. C) average returns. D) all of these.
Land of Many Lakes (LML) sells butter to a broker in Albert Lea, Minnesota. Because the market for butter is generally considered to be competitive, LML does not
a. choose the quantity of butter to produce. b. set marginal revenue equal to marginal cost to maximize profit. c. have any fixed costs of production. d. choose the price at which it sells its butter.
Refer to the graph shown. If this firm is maximizing profit, it will:
A. earn just normal profits, that is, zero economic profits. B. earn economic profits. C. make enough to cover its variable costs but not its fixed costs. D. incur a loss.