When plotted against the total output, what does the total fixed cost curve look like?
What will be an ideal response?
The total fixed cost curve is a horizontal straight line, indicating that at any level of output the total fixed cost does not change as output changes.
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Which of the following situations would be inconsistent with the others?
A) A deficit in the current account B) gross national expenditure being greater than gross national disposable income C) Net lending to the rest of the world D) A surplus in the financial account and capital account
Two consequences of asymmetric information are adverse selection and moral hazard. An important distinction between the two is
A) adverse selection exists prior to the completion of a transaction while moral hazard occurs after the transaction is completed. B) moral hazard exists prior to the completion of a transaction while adverse selection occurs after the transaction is completed. C) adverse selection leads to an inefficient quantity while moral hazard leads to an efficient quantity. D) moral hazard leads to an inefficient quantity while adverse selection leads to an efficient quantity.
Refer to the diagram for a private closed economy. Unplanned changes in inventories will be zero:
A. only at the $300 level of GDP.
B. only at the $200 level of GDP.
C. at all levels of GDP.
D. only at the $400 level of GDP.
In a country with floating exchange rates and low capital mobility, an increase in government spending will be
A) highly effective. B) less effective than with high capital mobility. C) not effective at all. D) harmful to the growth of real incomes.