Refer to the graph shown. In 1930, the United States passed the Smoot-Hawley Tariff Act, which raised tariffs on imported goods at an average of 60 percent. Other countries retaliated with similar tariffs and world output declined. The effect of the decline in foreign output on the U.S. AD curve can be shown by a movement from:
A. A to B.
B. A to C.
C. A to D.
D. B to A.
Answer: C
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If a company is producing at a level of output at which the long-run average-total-cost curve reaches a minimum, then the company:
a. is experiencing economies of scale. b. is operating at its minimum efficient scale. c. is experiencing increasing returns to scale. d. will shut down. e. is experiencing diseconomies of scale.
When firms differentiate their products, they
a. always create real differences among products b. usually strain the sales staff of the firm c. frequently create artificial or superficial differences among products, thus raising their production costs d. always increase their profits
Fractional reserve banking is a term used to describe a banking system whereby
A) individual banks share a fraction of the total funds deposited in the whole banking system. B) banks are required to quote interest rates in fractions. C) banks hold reserves equal to only a fraction of their deposit liabilities. D) banks hold reserves equal to a multiple of their deposit liabilities; that is, fractional in this case really means multiple. E) banks are required to maintain a certain fraction of their deposits in the form of checkable deposits, a certain fraction of their deposits in the form of savings deposits, etc.
The production function shows the volume of output that can be produced from given inputs.
Answer the following statement true (T) or false (F)