When yield curves are flat
A) long-term interest rates are above short-term interest rates.
B) short-term interest rates are above long-term interest rates.
C) short-term interest rates are about the same as long-term interest rates.
D) medium-term interest rates are above both short-term and long-term interest rates.
C
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Average total cost decreases with an increase in output because:
A) the total variable cost decreases with an increase in output. B) the average fixed cost decreases with an increase in output. C) the marginal cost of production increases with an increase in output. D) diminishing marginal returns sets in after a particular level of production.
Some economists argue that Okun's Law overstates the cost of cyclical unemployment because
A) the cost of retraining workers must be offset against the loss in output that occurs when workers are unemployed. B) if efficiency wages prevail, and workers are paid their real wage, already employed workers will reduce their effort, reducing output. C) it ignores the fact that leisure increases during a recession. D) it ignores the loss of government revenue and additional government expenditures that occur when unemployment rises.
Purchasing power parity is a good theory of explaining exchange rate behavior:
A. over both long and short periods. B. over periods lasting six to twelve months. C. over very short periods. D. over very long periods, such as decades.
In economics, the term physical capital
A) refers to funds used by businesses to acquire goods and services. B) refers to all manufactured resources used for production. C) refers to the process of raising funds through the stock market. D) defines the stock of merchandise already produced.