The marginal cost curve is a mirror image of the:
A. marginal product curve.
B. average variable cost curve.
C. average product curve.
D. total product curve.
Answer: A
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Why is the demand for loanable funds downward sloping?
A) People save less when the interest rate is low. B) More people borrow money when interest rates are low than when they are high. C) Fewer investment projects have returns that can beat higher interest rates, so people are more willing to invest at higher interest rates. D) People save more when the interest rate is high.
To induce an increase in the quantity demanded of its product, a monopolist must reduce the
A) quality of its product and thereby generate a downward shift its ATC curve. B) price of its product and thereby generate a rightward shift in its demand curve. C) price of its product and thereby generate a rightward movement along its demand curve. D) quality of its product and thereby generate a downward movement along its ATC curve.
The multiplier effect occurs because
A. When national income rises, the MPC increases, prompting further increases in income. B. The new income generated by an increase in aggregate demand will be spent, each time becoming new income again. C. The level of national income must be multiplied by the average propensity to consume to find total consumption spending. D. What business firms view as spending is viewed by households as income, so that new investment automatically becomes new income.
When the price of an inferior good falls, the substitution effect leads to ________ in the quantity purchased and the income effect leads to ________ in the quantity purchased
A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease