If the economy is in recession, explain what advice you would give the President, if you were a monetarist economist. What if you were a Keynesian?
If you were a monetarist, you would tell the President not to intervene in the economy because the economy will naturally move to full employment in the long run. If you were a Keynesian, you would advocate intervention in the form of lower taxes or more government spending, because Keynesians do not believe that the economy will achieve full employment by itself.
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Refer to the figure above. If a price control is imposed at $8, what is the new producer surplus in the market?
A) $20 B) $40 C) $60 D) $80
All four market forms discussed in the text maximize profit where
A. P = MC. B. AR = AC. C. MR = MC. D. MC = AR.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y2. C. P3 and Y1. D. P2 and Y3.
If a perfectly competitive firm charges a price that is equal to its average total cost:
A. the firm is earning an economic profit equal to zero. B. the firm is earning an economic profit greater than zero. C. the firm is earning an economic profit less than zero. D. It is not possible to determine anything about the firm's profits.