Technical efficiency is achieved when a firm produces
A. Enough output to cover the opportunity cost of resources.
B. An amount less than or equal to the production function.
C. Below the opportunity cost for the resources it uses.
D. At an amount indicated by a point on the production function.
Answer: D
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If an increase in investment spending of $20 million results in a $200 million increase in equilibrium real GDP, then
A) the multiplier is 0.1. B) the multiplier is 1. C) the multiplier is 10. D) the multiplier is 100.
The assumption that labor markets clear makes it very easy for the classical model to explain recessions
a. True b. False
Employers can try to overcome the moral-hazard problem involving their employees by
a. paying their employees more often. b. paying their employees below-equilibrium wages since the employees will likely shirk some of their responsibilities. c. better monitoring their employees' work efforts. d. requiring their employees to take a pre-employment work effort test.
What is true about government budget deficits and surpluses since 1940?
A) There have been more government budget surpluses than government budget deficits.
B) The number of government budget deficits is about the same as the number of government budget surpluses.
C) Balanced budgets have been more common than government budget deficits or government budget surpluses.
D) There have been more government budget deficits than government budget surpluses.