When output increases by 1%, the number of jobs does not tend to rise by 1% in the short run. Which of the following statements represents one of the reasons why this is true?
A. Firms are likely to meet some of the increase in output by reducing labor productivity.
B. A firm is likely to meet some of the increase in output by decreasing the number of hours worked per job.
C. Firms are likely to meet part of the increase in output by eliminating any excess capital they may have.
D. A firm is likely to meet some of the increase in output by increasing the number of hours worked per job.
Answer: D
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As a consumer moves rightward along an indifference curve, the
A) consumer remains indifferent among the different combinations of goods. B) consumer generally prefers the combinations of goods farther rightward along the indifference curve. C) income required to buy the combinations of the goods always increases. D) relative price of both goods falls.
If the average total cost of supplying a good exceeds the price at which the good can be sold, then entrepreneurs have:
A. an incentive to raise the average total cost of producing the good. B. no incentive to supply the good. C. an incentive to supply only a small amount of the good. D. an incentive to supply the good.
________ is a cost that changes with the quantity produced by the firm and is incurred by the firm in the short run.
A. Fixed cost B. Economic cost C. Variable cost D. Average total cost
According to the Taylor rule, if inflation equals 3 percent and there is a recessionary gap equal to 3 percent of potential output, the Fed will set a real interest rate of ________ percent and a nominal interest rate of ________ percent.
A. 1; 3 B. 3; 3 C. 1; 4 D. 2; 4