Which of the following assumptions is crucial to the classical macroeconomic model's assertion that the economy has built-in forces that automatically eliminate unemployment and quickly move the economy to its potential level of real GDP?
A. profit motive
B. rigid wages and prices
C. flexible wages and prices
D. natural rate of unemployment
C. flexible wages and prices
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Money market mutual funds
A) are included in M2 but not M1. B) are included in M1 but not M2. C) are included in M1 and M2. D) are the largest part of the monetary base. E) None of the above is correct.
For a firm in a perfectly competitive market, average revenue equals
A) average cost. B) the change in total revenue. C) the market price. D) price divided by quantity.
Which of the following conditions is true when a producer minimizes the cost of producing a given level of output?
A. The MRTS is equal to the ratio of input prices, and the marginal product per dollar spent on all inputs is equal. B. The marginal products of all inputs are equal. C. The MRTS is equal to the ratio of input prices. D. The marginal product per dollar spent on all inputs is equal.
Bounded rationality suggests that
A) individuals might make "incorrect" decisions because they are unable to consider all possible options. B) individuals would rather have less choice to more choice. C) rational decisions can only be made when choices are restricted. D) individuals are happier when their choices are restricted or "bounded."