An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease
Answer: D
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Total product divided by the total quantity of labor employed equals the
A) average product of labor. B) marginal product of labor. C) average total cost. D) average variable cost.
Figure 6.5 shows the short-run and long-run effects of an increase in demand of an industry. The market is in equilibrium at point A, where 100 identical firms produce 6 units of a product per hour. Suppose that the market demand curve shifts to the right. Why is the short-run supply curve steeper than the long-run supply curve?
A. Because production facilities are fixed in the short run. B. Because each firm experiences diminishing returns in the short run. C. Because production becomes costlier as firms squeeze more output from the existing production facilities. D. All of these are correct.
Macroeconomics involves the study of the decision-making of individual firms or individuals.
Answer the following statement true (T) or false (F)
Being a price taker essentially means
A) a firm can influence the market price. B) a firm cannot influence the market price. C) the firm cannot legally set its price above the market price. D) the firm cannot legally set its price below the market price.