Suppose firms become more optimistic about the economy's ability to avoid a recession and hence the expected profit increases. As a result, the demand for loanable funds curve shifts ________ and the real interest rate ________
A) leftward; rises
B) rightward; rises
C) rightward; does not change
D) leftward; falls
E) rightward; falls
B
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A good way to encourage agricultural production is to
a. encourage farmers to work harder b. subsidize input prices for farmers c. permit farm prices to rise with increasing demand d. create a monopoly firm to buy all farm output e. all of the above
Crowding out will be more pronounced the closer to vertical is the
A) IS curve. B) LM curve. C) consumption function. D) aggregate demand function.
An economy in which output has decreased and prices have decreased would suggest a:
A. decrease in short-run aggregate supply. B. increase in aggregate demand. C. increase in short-run aggregate supply. D. decrease in aggregate demand.
Jessica owns a company that makes pre-packaged sandwiches for convenience stores. The market price for a sandwich is $5 and Jessica is a price-taker. Her daily variable cost for making sandwiches is C(Q) = 2.5Q + (Q2/40) and her marginal cost is MC = 2.5 + (Q/20). She is currently producing sandwiches according to the quantity rule. What should Jessica do if she has an avoidable fixed cost of $50 a day?
A. She should keep producing sandwiches because the price is greater than the minimum of average fixed cost. B. She should keep producing sandwiches because she is maximizing profit at the current quantity. C. She should shut down production because the price is greater than the minimum of average cost. D. She should shut down production because the fixed cost can be avoided if she does.