How will price, output, and profit compare if firms maximize sales rather than profit?
A firm maximizing sales will operate where MR = 0, not MR = MC. Since MC > 0, MR = MC occurs at a lower output level than MR = 0 . Sales-maximizing firms will sell a larger output. Since demand slopes down, sales-maximizing firms must charge less than their profit-maximizing counterparts. Finally, sales-maximizing firms go beyond the profit-maximizing point. They are willing to accept lower profits in return for larger sales.
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The U.S. interest rate minus the foreign interest rate is called the ________
A) foreign interest rate differential B) U.S. bond rate differential C) U.S. interest rate differential D) U.S. stock yield differential
The relationship between real GDP and potential GDP is that
A) real GDP always equals potential GDP. B) real GDP never equals potential GDP. C) real GDP fluctuates about potential GDP. D) real GDP is always below potential GDP.
If you have assets that include $50 in cash, a checking account with $135, a savings account with $500, and a jar of coins for laundry of $15.75, how much M1 do you have?
What will be an ideal response?
In the basic closed-economy ISLM model, the money demand is a function of
A) output. B) money supply. C) interest rates. D) both A and C.