When the economy is experiencing inflation, an economist who follows the functional finance theorem is most likely to suggest that the government should:
A. run a balanced budget.
B. run a deficit.
C. do nothing.
D. run a surplus.
Answer: D
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Behaving strategically means:
A. evaluating decisions in which players act in their own self-interest, but the interplay of those decisions does not exist. B. acting to achieve a goal by withholding key information from the person with whom an exchange is being made. C. acting to achieve a goal by anticipating the interplay between your own and others' decisions. D. evaluating the impact of your choices on an uninvolved third party.
In a long-run equilibrium,
a. only a perfectly competitive firm operates at its efficient scale. b. only a monopolistically competitive firm operates at its efficient scale. c. neither a competitive firm nor a monopolistically competitive firm charges a markup over marginal cost. d. both a perfectly competitive firm and a monopolistically competitive firm operate at their efficient scale of production.
This year an economy produced 3,700 coats, 3,000 shoes and 2,000 socks. The price of coats was €50, the price of socks was €3.50 and the price of shoes was €70. In the base year, prices were 10% lower. Nominal GDP was:
(a) €361,800; (b) €402,000; (c) €420,000; (d) Cannot be computed.
Using time-series data, the demand function for a profit-maximizing monopolist has been estimated asQd = 142,000 - 500P + 6M - 400PRwhere Qd is the amount sold, P is price, M is income, and PR is the price of a related good. The estimated values for M and PR in 2014 are $25,000 and $200, respectively. The short-run marginal cost curve for this firm has been estimated as:MC = 200 - 0.024Q + 0.000006Q2Total fixed cost is forecast to be $500,000 in 2016. What is the value of average variable cost at the optimal level of output?
A. $196 B. $112 C. $96 D. $232 E. $76