To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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Suppose the marginal product of labor equals 1/L. If the wage is $1 per unit of labor, what is the short-run effect on the firm's labor demand if the price of output were to double?
A) The firm will demand half as much labor. B) The firm will demand twice as much labor. C) The firm will demand the same quantity of labor. D) There is not enough information to determine.
A legal entity that may conduct business in its own name just as an individual does is a(n)
A) corporation. B) entrepreneur. C) proprietorship. D) partnership.
When a business has implicit costs
A) economic profits are greater than accounting profits. B) economic and accounting profits are the same. C) economic profits are less than accounting profits. D) economic costs are the same as accounting costs.
In a put options contract, the
A) seller has the obligation to receive the instrument at a specified time. B) buyer has the obligation to deliver the instrument at a specified time. C) buyer has the obligation to receive the instrument at a specified time. D) seller has the obligation to deliver the instrument at a specified time.