Use the following given market-for-money diagrams to answer the next question.
The total demand for money is shown by
A. D1.
B. D2.
C. D3.
D. S.
Answer: C
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A firm sells a product in a perfectly competitive market. The marginal cost of the product at the current output level of 200 units is $4. The minimum possible average variable cost is $3.50. The market price of the product is $3. To maximize profits or minimize losses, the firm should
A. shut down. B. continue producing 200 units. C. increase production to more than 200 units. D. decrease production to less than 200 units.
Suppose that an American opens and operates a candy factory in Finland. This is an example of
a. foreign direct investment. American saving is used to finance Finish investment. b. foreign direct investment. American saving is used to finance American investment. c. foreign portfolio investment. American saving is used to finance Finish investment. d. foreign portfolio investment. American saving is used to finance American investment.
Refer to the graph shown. Expansionary fiscal policy is most likely to shift the aggregate demand curve from:
A. AD0 to AD2 if crowding out does not occur and from AD0 to AD3 if crowding out does occur. B. AD2 to AD0 if crowding out does not occur and from AD1 to AD3 if crowding out does occur. C. AD0 to AD2 if crowding out does not occur and from AD0 to AD1 if crowding out does occur. D. AD2 to AD0 if crowding out does not occur and from AD1 to AD2 if crowding out does occur.
One way the government can boost the economy out of a recession is:
A. with public announcements telling the public to save their money. B. by increasing government spending. C. by setting price ceilings on most goods so people can afford them. D. None of these will help an economy in recession.