Refer to the graphs below for a purely competitive market in the short run. The graphs suggest that as long run adjustments consequently occur, the firms in the industry will find that:
A. Profits will increase
B. Profits will decrease
C. Profits will be unchanged
D. Cannot be decided from the information given
B. Profits will decrease
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In developing countries, government expenditure levels are most closely related to:
A. what will bring about regime change. B. considerations about what will keep the existing government in power. C. what activist fiscal policy is necessary to achieve potential output. D. what is necessary to achieve long-term macroeconomic objectives.
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a. True b. False Indicate whether the statement is true or false
Excessive use of monetary or fiscal policies to achieve stabilization may:
A) require the cooperation of firms and the public in order to be effective. B) backfire if the economy becomes destabilized through erratic application. C) never be necessary as long as the economy can rely on automatic stabilizers. D) be better than weaker measures that may not hit the target.