Refer to the graph below. If the output level is Q2, then there will be:
A. Allocative efficiency
B. Maximum deadweight losses
C. Maximum consumer surplus
D. Greater marginal benefits than marginal costs of the product
A. Allocative efficiency
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If the MPC = 0.75, the government spending multiplier would be
A) 0.25. B) -7.5. C) 4. D) 25.
When inflation and unemployment are both higher than desired, most economists believe that the government should:
A. adopt contractionary monetary policies that reduce both inflation and unemployment. B. adopt expansionary fiscal policies that reduce both inflation and unemployment. C. not act as it is impossible to reduce either inflation or unemployment under these circumstances. D. determine whether reducing inflation is more or less important than reducing unemployment and adopt a policy that targets the more important goal.
If a firm shuts down in the short run it will
A) break even. B) declare bankruptcy. C) suffer a loss equal to its variable costs. D) suffer a loss equal to its fixed costs.
Which combination of circumstances will most likely raise the rate of interest for a loan the most?
A. high risk and a long length of time for repayment B. low handling charges and a long length of time for repayment C. low handling charges and low risk D. high risk and low handling charges