Refer to Figure 11.1. Assume aggregate demand is represented by AD1 and full-employment output is $6.0 trillion. The AD shortfall is equal to
A. $0.6 trillion.
B. $0.4 trillion.
C. $0.2 trillion.
D. None of the choices are correct.
Answer: B
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The primary reason why a monopoly can make a long-run economic profit is the existence of
A) barriers to entry. B) inelastic demand. C) price discrimination. D) many buyers.
The practice of setting price by increasing the average costs of production by some percentage is referred to as:
A) average cost pricing. B) percentage pricing. C) rate-of-return pricing. D) markup pricing.
If the real interest rate is below equilibrium, which of the following is likely to occur? a. Lenders will raise their interest rates which will encourage saving
b. Lenders will raise their interest rates which will encourage borrowing. c. Lenders will lower their interest rates which will encourage saving. d. Lenders will lower their interest rates which will encourage borrowing.
Accounting profits are typically:
A. greater than economic profits because the former do not take explicit costs into account. B. equal to economic profits because accounting costs include all opportunity costs. C. smaller than economic profits because the former do not take implicit costs into account. D. greater than economic profits because the former do not take implicit costs into account.