An example of a firm's fixed cost would be the
a. monthly rent it pays based on a multiple-year lease
b. cost of employing labor
c. quantity of inventory it accumulates
d. raw materials used in production
e. cost of shipping the goods it produces
A
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A typical economy produces thousands of different goods. Is it accurate to say that society faces a production possibilities frontier?
A. No, because two dimensions cannot capture the complexity of a full economy. B. No, although a graph with several thousand dimensions would be appropriate. C. Yes, although society does not face opportunity cost and the model does not apply. D. Yes, because scarcity always imposes opportunity costs. E. Uncertain, economic theory has no answer to this question.
According to Keynes, what is the most important determinant of households' spending on goods and services?
a. The price level. b. The interest rate. c. Autonomous consumption. d. Disposable income.
A move from E to F represents
A. an increase in quantity demanded.
B. a decrease in quantity demanded.
C. an increase in demand.
D. a decrease in demand.
An increase in aggregate supply causes:
a. real domestic output to decrease and the price level to rise b. Both real domestic output and the price level to decrease c. Real domestic output to increase and the price level to become smaller d. Both real domestic output and the price level to become greater