One consequence of an increase in government spending is that
a. autonomous consumption will increase
b. autonomous consumption and investment spending will decrease
c. the increase in GDP will equal the size of the amount of spending
d. autonomous consumption and investment spending will increase
e. investment spending will increase
B
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In the short-run, a perfectly competitive firm can earn normal profits or above normal profit but it cannot incur losses
a. True b. False Indicate whether the statement is true or false
If a firm's MRP of capital < MFC, the firm should
a. lower the interest rate b. decrease its quantity demanded of loanable funds c. increase its quantity demanded of loanable funds d. hire more labor e. raise the interest rate
As a general rule, zero pollution is not socially desirable because
A. there would be no production. B. the Environmental Protection Agency (EPA) needs to have something to do. C. no pollution would lead to global warming. D. all of these answer options are correct.
What are the consequences for a nation that keeps its exchange rate fixed, holds its own domestic interest rates below market to encourage domestic spending, and allows free foreign investment?
a. Foreign investors will not invest, so the only consequence will be a decline in the inflow of foreign investment. b. Domestic and foreign investors will invest in other nations, causing a sell-off of the domestic currency and, to maintain fixed rates, the central bank will have to buy its own currency, depleting its treasury reserves. c. There will be upward pressure on the rate of interest as more borrowing occurs, so the central bank will have to increase the stock of money. d. Interest rates in other nations will also fall as banks and other firms have to compete for international borrowers.