For a perfectly competitive firm, when MC is less than MR
A) the producer has an incentive to expand output.
B) the producer has an incentive to decrease output.
C) the producer has no incentive to change production.
D) economic profits must be positive.
Answer: A
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In the above figure, if A is the initial equilibrium point and there is an unanticipated rise in aggregate demand from AD1 to AD2, then
A) the new short-run equilibrium will be at point B. B) the new short-run equilibrium will be at point D. C) the new long-run equilibrium will be at point B. D) real Gross Domestic Product (GDP) per year will fall below Y1.
According to the Keynesian view, an increase in the money supply will cause interest rates to rise, causing levels of investment to fall
Indicate whether the statement is true or false
The crowding-in effect depends on the sensitivity of investment to
a. GDP, as does the crowding-out effect. b. interest rates, whereas the crowding-out effect depends on the sensitivity of investment to GDP. c. interest rates, as does the crowding-out effect. d. GDP, whereas the crowding-out effect depends on the sensitivity of investment to interest rates.
The use of money allows trade to be roundabout
a. True b. False Indicate whether the statement is true or false