If a firm is producing a quantity along the upward sloping portion of its marginal cost curve at which marginal cost exceeds price and is earning positive economic profits, it should
a. continue to produce this quantity.
b. decrease the quantity produced because doing so will increase profit.
c. increase the quantity produced because profits are still positive.
d. wait for the price to increase to its current marginal cost.
b. decrease the quantity produced because doing so will increase profit.
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For a fixed inflation rate target, an increase in the inflation rate corresponds to a ________ the aggregate demand curve and an increase in exogenous spending corresponds to a ________ the aggregate demand curve.
A. movement up; shift right of B. shift left of; shift right of C. shift left of; movement up D. movement up; movement down
The primary assets for a bank are demand deposits
Indicate whether the statement is true or false
In a fractional-reserve banking system with no excess reserves and no currency holdings, if the central bank buys $100 million worth of bonds,
a. reserves and the money supply increase by less than $100 million. b. reserves increase by $100 million and the money supply increases by $100 million. c. reserves increase by $100 million and the money supply increases by more than $100 million. d. both reserves and the money supply increase by more than $100 million.
The rational-expectations hypothesis implies that there is no need for government stabilization policies.
Answer the following statement true (T) or false (F)