When a profit-maximizing firm's fixed costs are considered sunk in the short run, then the firm
a. can set price above marginal cost.
b. must set price below average total cost.
c. will never show losses.
d. can safely ignore fixed costs when deciding how much output to produce.
d
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Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and current international transactions balance in the context of the Three-Sector-Model? a. The quantity of real loanable
funds per time period falls and current international transactions balance becomes more negative (or less positive). b. The quantity of real loanable funds per time period rises and current international transactions balance becomes more negative (or less positive). c. The quantity of real loanable funds per time period and current international transactions balance remain the same. d. The quantity of real loanable funds per time period rises and current international transactions balance remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Which of the following is correct?
a. The GDP deflator is better than the CPI at reflecting the goods and services bought by consumers. b. The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers. c. The GDP deflator and the CPI are equally good at reflecting the goods and services bought by consumers. d. The GDP deflator is more commonly used as a gauge of inflation than the CPI is.
What is an example of the substitution effect?
A. The firm expands output when production costs fall. B. The firm hires more labor when the wage falls because labor has become relatively cheaper compared to the price of other factors of production. C. Workers choose to provide more hours of labor when the wage rate decreases. D. More labor is hired as long as the marginal product of labor is positive. E. The firm expands output when production costs increase.
Unlike Classical growth theory, new growth theory emphasizes the importance of:
A. the law of diminishing marginal productivity. B. population growth. C. human capital. D. technology.