In the long run, monopolistic competitive firms are considered to be operating inefficiently because their
A) economic profits are positive.
B) economic profits are zero.
C) average total costs are not at a minimum.
D) marginal costs are rising.
Answer: C
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If it does not shut down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue
A) only in the short run. B) only in the long run. C) always to maximize its profit. D) only if it is not possible to produce where price equals average variable cost. E) only if it is not possible to produce where price is greater than average total cost.
The Keynesian analysis of fiscal policy argues that:
a. fiscal policy should generally be expansionary except during periods of economic recession. b. fiscal policy should generally be restrictive except during inflationary booms. c. the federal budget should be balanced annually except during war. d. the federal budget should be used to maintain aggregate demand at a level consistent with full employment.
Assume that C = $1,500 + 0.80(Y) and intended investment = $500 . Then the equilibrium level of national income is
a. $24,000 b. $20,000 c. $19,000 d. $15,000 e. $10,000
Which of the following leads to a lower level of unemployment in the long run?
a. both an increase in the size of the money supply and an increase in the money supply growth rate b. an increase in the size of the money supply but not an increase in the money supply growth rate c. an increase in the money supply growth rate, but not an increase in the size of the money supply d. neither an increase in the size of the money supply nor an increase in the money supply growth rate