A main reason the federal government may choose to spend would be the:
A. real interest rates decrease.
B. real interest rates increase.
C. desire to achieve full-employment GDP.
D. government expected to earn a large return on its spending.
C. desire to achieve full-employment GDP.
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Managers of a natural monopoly regulated using rate of return regulation have an incentive to
A) exaggerate the firm's costs. B) underestimate the firm's costs. C) minimize the monopoly's deadweight loss. D) make zero economic profit. E) exaggerate the firm's profit.
Suppose a perfectly competitive constant-cost industry is in long-run equilibrium when market demand suddenly falls. What happens to the industry in the long run?
a. It experiences no change form the original equilibrium b. It experiences a higher equilibrium price and produces more output c. It experiences a lower equilibrium price but produces more output d. It experiences the same equilibrium price but produces more output e. It experiences the same equilibrium price but produces less output
Hypothetical economy: C=$600 billion, I=$300 billion, G=$150 bill Assume for the long run: 1. For every 1% increase (decrease) in interest rate, planned investment decreases (increases) by $5 billion. 2. For every $10 billion increase (decrease) in government spending, interest rate increases (decreases) by 1%. 3. The MPC = 0.8 Assuming the economy is in equilibrium, how much is equilibrium output?
A) $750 billion. B) $900 billion C) $1,050 billion D) $1,350 bill
When P = $65, the quantity demanded of a good is 80 units, and the quantity supplied of the good is 40 units. For every $10 increase in the price of this good, quantity demanded falls by 10 units and quantity supplied rises by 10 units. The equilibrium price of this good is ___________and the equilibrium quantity of this good is _________ units
A) $55; 30 B) $75; 50 C) $75; 70 D) $85; 50 E) $85; 60