If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing
A. diseconomies of scale.
B. constant returns to scale.
C. diminishing marginal product.
D. economies of scale.
Answer: A
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Suppose the economy was in equilibrium, and the national government increased spending by $200 billion. Monetarist theory would predict that the main factor that will readjust the economy is the:
a. Nominal and real exchange rates. b. Real risk-free interest rate. c. Real wage rate. d. Money supply. e. Price level.
In a closed economy, national saving is
a. usually greater than investment. b. equal to investment. c. usually less than investment because of the leakage of taxes. d. always less than investment.
The interest rate effect, the real balance effect, and the international trade effect all begin with a change in the price level
Indicate whether the statement is true or false
Other things the same, when the price level rises, interest rates
a. rise, so firms increase investment. b. rise, so firms decrease investment. c. fall, so firms increase investment. d. fall, so firms decrease investment.