Figure 18-2
Figure 18-2 shows the widget market before and after an excise tax is imposed. After the tax is imposed, the amount that a firm keeps for itself from the sale of each widget is ____.
A. $95
B. $100
C. $120
D. $125
Answer: A
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In the long run, the nominal exchange rate
A) is a monetary phenomenon, determined by the quantities of money in two countries. B) is not related to the real exchange rate, since the real exchange rate is the true value of currencies. C) will not change if prices in one country change, since prices are nominal variables. D) is fixed by world central banks, as indicated by the fixed exchange rate system.
If the economy is slipping into a recession, which of the following would be an appropriate fiscal policy?
A) a decrease in oil prices B) a decrease in government purchases C) a decrease in taxes D) an increase in the money supply and a decrease in interest rates
Equilibrium in the loanable funds market determines
A) the real interest rate. B) the nominal interest rate. C) the current interest rate. D) the expected interest rate.
For perfectly competitive firms, what is the relationship among market price (P), average revenue (AR), and marginal revenue (MR)?
a. P = AR = MR b. P > AR = MR c. P = AR > MR d. P = AR < MR e. P < AR = MR