Figure 7-7 shows a firm’s total variable cost for different daily output levels. In
addition, the firm has total fixed cost of $50 per day. If output increases from 20 to 30
units, average total cost rises from
Assume that Canadian firms can produce one automobile or 1,000 calculators per day,
and that U.S. firms can produce three automobiles or 6,000 calculators per day. The
terms of trade should be between
a. 1,000 and 2,000 calculators per automobile, and the U.S. should produce both
calculators and automobiles
b. 1,000 and 6,000 calculators per automobile, and the U.S. should produce automobiles
c. 1,000 and 6,000 calculators per automobile, and the U.S. should produce calculators
d. 1,000 and 2,000 calculators per automobile, and the U.S. should produce automobiles
e. 1,000 and 2,000 calculators per automobile, and Canada should produce automobiles
Increases in investment spending cause interest rates to increase. As a result,
a. households will demand more loanable funds
b. households will save a smaller fraction of their incomes
c. households will voluntarily decrease their consumption spending
d. the investment curve will shift leftward
e. firm will receive greater profits from households who are consuming goods
The government budget deficit is
a. the difference between government purchases and government revenues from bonds
and taxes
b. caused by a lack of business sector investment
c. created when the government expenditures exceed net taxes
d. caused by leakages in the economy
e. is created by government injections
At the profit-maximizing, or loss-minimizing, level of output for the firm in Figure
11-3, total revenue is approximately
Why do the British supply pounds to the dollar-pound market?
a. To buy goods and services from American firms.
b. To buy American assets.
c. To buy stock in American firms on the London stock exchange.
d. Both (a) and (b) are correct.
e. None of the above.
Suppose the CPI has been overstating the increase in the cost of living by 1% for 25
years, the total impact of that 25 years later is
a. less than 25%
b. exactly 25%
c. negligible since it is only 1% per year
d. more than 25%
e. 24%
Average fixed cost is
Automatic stabilizers reduce fluctuations in GDP by
a. eliminating spending shocks
b. increasing the amount of spending each year
c. reducing the additional spending that occurs in each round of the multiplier
d. increasing saving
e. reducing the need for government involvement in the economy
The marginal cost curve crosses
If all firms in a market have the same LRATC curve,
Most recessions last approximately three years.
In order to enjoy a rising standard of living standard, a nation’s capital stock must grow
faster than
a. the rate of depreciation
b. the rate of inflation
c. its population
d. its financial assets
e. its overall rate of economic growth
In the short run, following an increase in government purchases,
a. the aggregate expenditure line shifts upward by more than the increase in government
purchases
b. real GDP declines by the change in government purchases times the expenditure
multiplier
c. the money supply curve shifts rightward because real income rises
d. the interest rate rises because the money demand curve shifts rightward
e. autonomous consumption and investment increase because of the increase in real
income