Three basic decisions must be made by all economies. What are they?
a. how much will be produced, when it will be produced, and how much it will cost
b. what the price of each good will be, who will produce each good, and who will consume each good
c. what will be produced, how goods will be produced, and for whom goods will be produced
d. how the opportunity cost principle will be applied, if and how the law of comparative advantage will be utilized, and whether the production possibilities constraint will apply
C
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The IS curve shows the combinations of output and the real interest rate for which
A) the goods market is in equilibrium. B) the labor market is in equilibrium. C) the financial asset market is in equilibrium. D) an increase in output will cause the market-clearing interest rate to be bid up.
In the Keynesian model, if aggregate expenditures exceed aggregate output and inventories of firms fall, then the aggregate output and the business sector could be expected to:
A. increase output. B. decrease output. C. decrease investment. D. hire fewer workers.
The key to assessing whether fiscal policy is expansionary is to observe the change in the cyclically adjusted budget as a percentage of GDP.
Answer the following statement true (T) or false (F)
If a firm is operating at an output that is a little less than the minimum point of its ATC curve, the marginal cost is
A. greater than ATC and rising. B. greater than ATC and falling. C. less than ATC and rising. D. less than ATC and falling.