If a large decrease in rent leads to a firm cutting back on the labor it uses,
A. the output effect outweighs the substitution effect.
B. the substitution effect outweighs the output effect.
C. the substitution and output effects are equal.
D. there is no way of determining the relative strengths of the output and substitution effects.
B. the substitution effect outweighs the output effect.
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The infant industry argument is valid when
A. a new industry is suffering financial losses. B. a new industry is less efficient than foreign competitors. C. the industry’s prospective gains are sufficient to repay the social losses incurred while it is being protected. D. the industry is not likely to be profitable in the future.
A firm sets its output where
A) marginal profit minus marginal cost equals zero (MP - MC = 0). B) marginal revenue minus marginal profit equals zero (MR - MP = 0). C) marginal revenue minus marginal cost equals zero (MR - MC = 0). D) marginal revenue minus marginal cost is greater than zero (MR - MC > 0)
Nominal interest rates are the
A) interest rates quoted in the market. B) real interest rates less the inflation rate. C) interest rates quoted in the market minus the inflation rate. D) interest rates quoted in the market plus the expected inflation rate.
Which statement most accurately describes the effect financial technology has had on the demand for money in the United States?
A) Advances in financial technology have all increased the demand for money. B) Some advances in financial technology have increased the demand for money while others have decreased it. C) It is not possible to tell what would be the effect because financial technology has not changed over the past three decades. D) Advances in financial technology have all decreased the demand for money. E) Advances in financial technology have had no effect on the demand for money.