Consider a firm in the short run. Average product is at its maximum when
A) average product equals marginal product and marginal product is falling.
B) marginal product is maximized.
C) the maximum quantity of the variable input is employed.
D) diminishing returns cease to operate.
E) total product is maximized.
Ans: A) average product equals marginal product and marginal product is falling.
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Diebold and Rudebusch showed that the composite index of leading indicators did not improve forecasts of industrial production because
A) the index is not produced in a timely manner. B) the government manipulates the index so it never predicts a recession. C) the index is not designed for forecasting. D) data on the components of the index are revised.
After initial success, the OPEC cartel saw the price of oil and the revenues of its members decline due, in part, to
a. the low elasticity of demand for oil in the short run. b. the large number of buyers from each member nation. c. surging demand for oil in the early 1980s. d. OPEC members failing to produce their agreed-upon production levels.
The quantity of money held in response to interest rates is the:
a. precautionary motive for holding money. b. unit-of-account motive for holding money. c. transactions motive for holding money. d. speculative motive for holding money.
If aggregate demand increases and expectations regarding inflation remain constant
A. the short-run Phillips curve shifts to the left. B. the short-run Phillips curve shifts to the right. C. the economy moves along the short-run Phillips curve. D. the long-run Phillips curve shifts to the right.