Which scenario best explains the Keynesian transmission mechanism when the investment demand curve is vertical?
A) The interest rate falls, investment falls even more, the AD curve shifts rightward, but total expenditures do not change.
B) The interest rate falls, investment rises, total expenditures rise, and the AD curve shifts rightward.
C) The interest rate falls, investment falls instead of rising, and the AD curve ends up shifting leftward.
D) The interest rate falls, but investment does not respond; there is no change in total expenditures and no shift in the AD curve.
D
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In the above figure, the intersection of curves A and C is the point at which
A) average total cost is minimized. B) average variable cost is minimized. C) average fixed cost is minimized. D) total product is maximized.
Which of the following is NOT a problem in the implementation of industrial policies?
A) Choosing the industry to target B) Knowing the optimum amount of resources to provide the targeted industry C) The encouragement of rent seeking by firms in other industries D) The benefits are partly captured by foreign firms. E) All of the above are problems.