In the long run, each firm in a competitive industry earns
a. zero accounting profits.
b. zero economic profits.
c. positive economic profits.
d. Both a and b are correct.
b
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At a given output level, a temporary reduction in government purchases will
A) increase desired saving, causing the IS curve to shift down and to the left. B) increase desired saving, causing the IS curve to shift up and to the right. C) decrease desired saving, causing the IS curve to shift down and to the left. D) decrease desired saving, causing the IS curve to shift up and to the right.
For network externalities to occur
A) the government has to create new laws. B) deadweight loss must be minimized. C) there must be a critical mass of users. D) there must be a positive benefit to society.
Which of the following is a source of income inequality?
a. differences in ability b. differences in work intensity c. risk taking d. all of the above
When commercial banks retire outstanding loans, the supply of money is increased.
Answer the following statement true (T) or false (F)