Keynes believed that abrupt changes in spending behavior
A. Move the economy to full employment.
B. Lead to responses by market participants that may make the market outcome worse.
C. Have no effect on the economy.
D. Help stabilize the economy.
Answer: B
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The behavior of people in government
A) can be explained or understood by applying the same principles we use to predict the behavior of people in business. B) is different from the behavior of people in business because the former aims at the general welfare rather than private welfare. C) is essentially different from market behavior. D) is not compatible with the existence of a market system. E) serves to balance private-sector behavior.
A firm that backward vertically integrates
A) moves downstream in the production process. B) requires that the production process be relatively simple. C) has to merge with another firm. D) may be producing its own inputs.
The minimum point of the average total cost curve occurs at an output level that corresponds to
a. the maximum possible total cost b. an average total cost equal to the marginal cost of the next unit c. an average variable cost that is greater than the marginal cost of the next unit d. a marginal cost that is decreasing e. a constant average fixed cost
A monopolist is currently hiring 5,000 units of labor. At this level, the marginal revenue of output is $10, the (fixed) wage rate is $300, and the marginal product of labor is 50. In order to maximize profit, the firm should
A. hire more labor because the next unit of labor increases profit by $500. B. hire more labor because the next unit of labor increases profit by $200. C. hire less labor because the last unit of labor added more to total cost ($300) than to total revenue ($10). D. keep the level of employment the same because the firm is earning a profit of $100,000.