When businesses are cutting back production, then it is probably true that
A. total spending is greater than total output.
B. total output is greater than total income.
C. total spending is less than total output.
D. inventory levels are decreasing.
Answer: C
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Let S = y - (100 + 0.5y). Assume no government or foreign sectors. At the equilibrium level of income, y* = 800, the level of saving is
A) 0. B) 50. C) 100. D) 300.
Which of the following would cause a firm's cost curve to shift downward?
a. a decrease in resource prices b. an increase in taxes c. an increase in demand for the firm's product d. a reduction in output
According to the "paradox of thrift," an increase in the
A. average propensity to save results in an increase in national output. B. average propensity to save results in a decrease in unemployment. C. saving function (upward shift) can result in a decrease in both national output and total saving. D. consumption function (upward shift) results in a decrease in national income.
Answer the following questions true (T) or false (F)
1. If a firm's goal is to maximize revenue, it will price its product to correspond to the unit-elastic segment of its demand curve. 2. When Audrina raised the price of her homemade cookies, her total revenue increased. This suggests that the demand for Audrina's cookies is elastic. 3. If the price elasticity of demand is unit elastic, a 10 percent increase in price will result in a 10 percent increase in revenue.