Which of the following would not be a policy option to eliminate an AD shortfall?
A. Reduce transfer payments.
B. Increase transfer payments.
C. Increase government purchases.
D. Reduce taxes.
Answer: A
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The figure above shows the situation facing Smart Digit, Inc, a firm in monopolistic competition that produces calculators. What quantity does the firm produce?
A) 200 calculators per day B) 300 calculators per day C) more than 300 calculators per day and less than 400 calculators per day D) 400 calculators per day
Refer to the information provided in Figure 3.7 below to answer the following question(s).
?Figure 3.7Refer to Figure 3.7. Assume the market is initially at Point B and that pizza is a normal good. A decrease in income would cause the market to move from Point B on demand curve D2 to
A. demand curve D1. B. demand curve D3. C. Point A on demand curve D2. D. Point C on demand curve D2.
Raising the discount rate is: a. an expansionary policy because it raises the ratio of excess to total reserves in the banking system
b. a contractionary policy on the part of the member banks of the Fed because it raises the firms' costs of borrowing from them. c. a contractionary policy on the part of the Fed because it raises the commercial banks' cost of borrowing from it. d. an expansionary policy on the part of the member banks of the Fed because it raises their profits relative to those of the nonmember banks. e. an expansionary policy on the part of the Fed because increasing the interest rates that the banks are allowed to charge will increase their willingness to make loans.
In the short run, a perfectly competitive firm is producing an output level where marginal cost equals $10, average total cost equals $7, and marginal revenue equals $9 . Which of the following statements is correct?
a. The firm is earning an economic profit which could be increased by raising output. b. The firm is earning an economic profit which could be increased by lowering output. c. The firm is maximizing its economic profit. d. The firm is suffering an economic loss which could be decreased by raising output. e. The firm is suffering an economic loss which could be decreased by lowering output.