A decrease in the marginal tax rate on asset income in the short run in the market clearing model:
a. raises the stock of capital
b. reduces the market clearing rental price of capital.
c. does not change real GDP.
d. all of the above.
Answer: c. does not change real GDP.
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
The marginal revenue curve facing a monopolistically competitive firm
A) lies on its demand curve. B) lies above its demand curve. C) lies below its demand curve. D) is equal to its price curve. E) is parallel to its demand curve.
When an input represents a larger proportion of a firm's total costs, then
A) demand for the input will tends to be less elastic. B) the input demand will not vary significantly with a change in input price. C) the usage of the input cannot be varied in the production function. D) demand for the input will tends to be more elastic.
Answer the following statements true (T) or false (F)
1. Monetarists argue that the Fed reduces fluctuations in economic activity and the price level. 2. The Fed chairman appears before Congress semi-annually to present the Monetary Policy Report. 3. The Fed used the Term Auction Facility in 2008 to aid bond dealers. 4. The Reigle-Neal Act was passed by Congress in 1932 to regulate banking. 5. Branch banking can now be carried out regionally and even nationally.