When PAE < Y the economic response for inventories should be:
A. there will be no change in inventories.
B. inventories will increase.
C. inventories should decrease initially and then sharply increase.
D. inventories will decrease.
Answer: B
You might also like to view...
Based on the graph showing the effective federal funds rate, once interest rates bottomed out after the 2001 recession, they ______.
a. levelled off for several years
b. began an upward trend that is still ongoing
c. increased consistently for several years
d. went up slightly one year then dropped rapidly
Exhibit 1A-5 Straight line
In Exhibit 1A-5, as X increases along the horizontal axis, from point C to point D on the line, the Y values
A. increase so the relationship between X and Y is direct. B. decrease so the relationship between X and Y is inverse. C. remain unchanged so the relationship between X and Y is independent. D. change so the relationship between X and Y is variable.
Globalization is an ongoing process because:
A. the globalized AS/AD model will replace the standard AS/AD model, forever changing how economists view the economy. B. goods inflation has been solved as a problem for the economy, allowing the government to continue to run expansionary policies. C. government will continue to fail to implement policies that address the structural adjustments necessary to make U.S. firms more competitive. D. foreign countries, especially China and India, are moving up the value-added chain and competing with more and more goods.
You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 120 ? 6Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2. What price should be charged to maximize profits?
A. 60 B. 70 C. 66 D. 76