An increase in autonomous consumption has the same equilibrium effect as a(n)
A. decrease in investment.
B. increase in investment.
C. decrease in net exports.
D. increase in taxes.
Answer: B
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Ted's Pancake Kitchen suffers a short-run loss. When should Ted decide to shut down rather than continue to produce?
A) if his Kitchen's revenue is less than its fixed costs B) if his Kitchen's revenue is less than its total costs C) if his Kitchen's revenue is less than its variable costs D) if his Kitchen's revenue is less than its explicit costs
A special license is required to operate a taxi in many cities. The number of licenses is restricted. More drivers want licenses than are issued. This describes a non-perfectly competitive market because
A) taxi services are very different. B) firms cannot freely enter and exit the market. C) transaction costs are high. D) the government generates revenue from the licenses.
Development assistance is designed to spur population growth in poor countries.
Answer the following statement true (T) or false (F)
To the extent that firms base investment decisions on current profits,
a) Tobin’s q theory is supported b) investment spending tends to destabilize the economy c) resources are efficiently allocated d) the hypothesis that available cash flow drives investment is rejected e) taxes, depreciation, and interest rates are irrelevant