In the long run:
A. all costs are variable costs.
B. all costs are fixed costs.
C. fixed costs are greater than variable costs.
D. variable costs equal fixed costs.
Answer: A
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
For the past 40 years the Federal Reserve has expressed policy in terms of a target value for:
A. open market operations. B. bank reserves. C. the Federal Reserve discount rate. D. the federal funds rate.
If the government taxes producers that create pollution, the government's policy
A) allows the producers to pollute more by increasing their costs. B) results in less production because the producers' costs have risen. C) eliminates pollution entirely by shifting the supply curve leftward. D) allows the firms to pass along higher costs but doesn't cut pollution. E) forbids the firms from passing along higher costs.
If the interest rate is 10 percent, the present value of $400 to be received two years from today is about
A) $331. B) $484. C) $364. D) $440.