Assume the MPC is 0.75. To eliminate an AD shortfall of $200 billion, the government should
A. Increase taxes by $66.7 billion.
B. Decrease spending by $50 billion.
C. Increase spending by $50 billion.
D. Increase spending by $800 billion.
Answer: C
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If a firm enlarges its factory size and realizes higher average costs of production then
a. it has experienced economies of scale. b. it has experienced diseconomies of scale. c. it has experienced constant returns to scale. d. the long-run average cost curve slopes downward. e. the long-run average cost curve shifts upward.
A decrease in the price level
A) shifts the AD curve to the right. B) shifts the AD curve to the left. C) causes an upward movement along the existing AD curve. D) causes a downward movement along the existing AD curve. E) none of the above
In Figure 22.2, which area represents total value to the smoker? 
A. 0BCQ* B. 0P*CQ* C. 0ACQ* D. BP*C
Refer to Scenario 1.1 below to answer the question(s) that follow.SCENARIO 1.1: An economist wants to understand the relationship between minimum wages and the level of teenage unemployment. The economist collects data on the values of the minimum wage and the levels of teenage unemployment over time. The economist concludes that a 1% increase in minimum wage causes a 0.2% increase in teenage unemployment. From this information he concludes that the minimum wage is harmful to teenagers and should be reduced or eliminated to increase employment among teenagers.Refer to Scenario 1.1. A graph of the value of the minimum wage on one axis and the level of teenage unemployment on the other axis is an example of
A. a variable theory. B. an economic theory. C. an economic model. D. inductive reasoning.