If all firms in the industry have similar demand, marginal revenue, and cost curves as the firm in the figure above, in the long run
A) nothing changes.
B) some firms exit the industry and the economic losses of the remaining firms decrease.
C) some firms exit the industry and the economic profits of the remaining firms increase.
D) new firms enter the industry and the economic losses of the original firms decrease.
E) new firms enter the industry and the economic profits of the original firms increase.
B
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Consider the two graphs above. Suppose that allowable deductions from taxable business income are increased. This would ________ the desired level of the capital stock, as depicted in graph ________
A) increase; B B) increase; A C) decrease; B D) decrease; A
The multiple by which the commercial banking system can expand the supply of money is equal to:
A. The ratio of actual reserves to required reserves B. The reciprocal of the federal funds rate C. The reciprocal of the reserve ratio D. The ratio of required reserves to actual reserves
If a good has an income elasticity of 0.18, then it is:
A. a normal good, and a necessity. B. a normal good, and a luxury good. C. an inferior good, and a necessity. D. an inferior good, and a luxury.
The classical economists believed all of the following, EXCEPT
A. demand creates its own supply. B. the quantity of money people wanted to save and invest affected interest rates. C. recessions are temporary. D. wages and prices are both downwardly flexible.