Within the framework of the aggregate expenditures model, what will happen if an economy is operating at a real GDP greater than full-employment real GDP?
A. An inflationary gap exists.
B. Real GDP will fall.
C. The inventories of firms will rise.
D. Firms will cut back on their current rate of output.
Answer: A
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All else equal, the price elasticity of demand for a good tends to be lower:
A. in the long run. B. if the good represents a large share of a consumer's budget. C. if the good has few close substitutes. D. if the good has many close substitutes.
Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day.Employee-Hours Per DayOutput Per Day0014048091201516023200 When the firm uses 9 employee-hours per day, its total cost each day is:
A. $126. B. $64. C. $176. D. $56.
In which of the following situations is Mahmut using a rule of thumb?
a. He chooses to take the bus to work instead of riding his bike because he injured his knee. b. He switches brands of deodorant because the store didn’t have his usual scent in stock. c. Before moving, he holds a yard sale but doesn’t sell much because his prices are too high. d. While traveling, he eats at a restaurant because its décor reminds him of his favorite restaurant back home.
Management fees for mutual funds are:
A. usually a percentage of the gains the fund achieves. B. fixed by regulation and can vary by the size of the fund. C. fixed by regulation. D. usually a percentage of the funds under management.