To illustrate the classical argument that "supply creates its own demand," the aggregate supply curve should be drawn:
A. downward-sloping.
B. upward-sloping.
C. horizontal.
D. vertical.
Answer: D
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According to this Application, falling home equity values have decreased consumer wealth, which is a measure of a consumer's
A) total net worth. B) annual income. C) annual income minus total expenses. D) annual income minus annual expenses.
Suppose First National Bank has $200 million of assets and $20 million of equity capital
If First National has a 2% return on assets (ROA), what is its return on equity (ROE)? Suppose First National's equity capital declines to $10 million, while its assets and ROA are unchanged. What is First National's ROE now?
Most economists believe that the CPI
a. accurately measures the inflation rate b. accurately measures the inflation rate except during years when there are major economic shocks like the Arab oil embargo c. slightly underestimates the inflation rate d. seriously underestimates the inflation rate e. overstates the inflation rate
In the long run in a monopolistically competitive industry,
a. economic profit will be positive b. the price will be driven to zero c. the firm will not operate where MR = MC d. economic profit will be zero e. the price will exceed average total cost