Refer to the graph shown. The line segment that represents average fixed costs of producing Q* is:
A. CB.
B. AB.
C. AC.
D. cannot be determined.
Answer: B
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Suppose that when one person consumes a good, it is possible to provide it to others at no additional cost. Such a good is called
a. nonexcludable. b. nonrivalrous. c. a free good. d. a Clarke good.
Which of the following is not a reason why the U.S. economy has been more stable since 1950?
A) Unemployment insurance and other government programs curtail the decline in spending that occurs during a recession. B) Services have become a larger fraction of GDP and goods have become a smaller fraction of GDP. C) Goods have become a larger fraction of GDP and services have become a smaller fraction of GDP. D) The government has actively pursued policy to combat recessions and prolong expansions.
All of the following would increase the natural rate of unemployment EXCEPT
A) union activity restricts the mobility of labor. B) government licensing of teachers restricts employment. C) a mismatch of skills and jobs. D) a downturn in the economy.
Contractionary fiscal policy may have some undesirable consequences. Among these is
a. higher unemployment. b. higher inflation. c. higher net exports. d. larger federal deficits.