If individual firms face a horizontal demand curve at a given market price:
A. price is equal to average total cost.
B. price is equal to marginal cost.
C. price is equal to marginal revenue.
D. price is equal to average variable cost.
Answer: C
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A central bank accepts deposits from
A) the federal government and commercial banks. B) commercial banks and private businesses. C) private businesses and individuals. D) individuals, private businesses, commercial banks, and the federal government.
This month Jones bought $10 of fresh hops for making home-brewed lager. In principle, what happens to GDP?
A) Nothing, because it involves the production of homemade beer. B) Nothing, because the hops are an intermediate good. C) GDP increases by $10. D) GDP increases by $10 as long as Jones is satisfied with the final product.
Suppose a U.S. resident buys a car from a car maker in Japan. This transaction will:
a. have a negative effect on Japan's balance of trade in merchandise. b. have a negative effect on the U.S. balance of trade in merchandise. c. have a positive effect on the U.S. balance of trade in merchandise. d. bring money into the United States. e. have no effect on Japan's balance of trade in merchandise.
The main reason that the deficit grows in a recession is that
a. the government reacts quickly and adjusts taxes to compensate. b. monetary policy that targets interest rates causes the costs of borrowing to fall. c. the deficit causes the recession, and reducing the deficit cures the recession. d. many forms of taxes act as automatic stabilizers.