The multiplier ensures that equilibrium GDP equals full-employment GDP.
Answer the following statement true (T) or false (F)
False
Multiplier effects make changes in government spending a powerful policy lever. The multiplier also increases the risk of error, however. In practice, we rarely know the exact size of the shortfall in aggregate demand. The multiplier is also harder to calculate when taxes and imports enter the picture. Nothing ensures that equilibrium GDP will be equal to full-employment GDP.
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If a natural monopoly is allowed to set its price above its average total cost, then
A) the company makes an economic profit. B) the company incurs an economic loss. C) competitors will enter the market. D) the company will produce more than the efficient amount of output.
The price of a seller's product in perfect competition is determined by
A) the individual seller. B) the individual demander. C) market demand and market supply. D) a few of the sellers.
Graphically, a market demand curve is found by
A) taking the average of all prices that people are willing to pay. B) summing the quantities demanded by all individuals at each price. C) summing the prices each consumer would pay for each quantity. D) taking the average of the individual demand curves.
A monopolist is defined as
A. a single producer of a good or service for which there is no close substitute. B. a producer of a good or service that is expensive to produce, requiring large amounts of capital equipment. C. a large firm, making substantial profits, that is able to make other firms do what it wants. D. a firm with many business establishments located across the nations.