Expansionary monetary policy should be used if:
A) aggregate demand-aggregate supply equilibrium is below potential output.
B) aggregate demand-aggregate supply equilibrium is above potential output.
C) aggregate demand-aggregate supply equilibrium is equal to potential output.
D) none of the above.
A
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Refer to Figure 12-5. The figure shows the cost structure of a firm in a perfectly competitive market. If the firm's fixed cost increases by $1,000 due to a new environmental regulation, what happens to its profit-maximizing output level?
A) It remains the same. B) It decreases. C) It increases. D) It could increase, decrease, or remain constant, depending on whether the firm is able to cut costs somewhere else.
In a small country, the adult population equals 10,000. There are 3,000 people unemployed and 4,000 people are employed. The labor force participation rate equals
A) 70 percent. B) 57 percent. C) 40 percent. D) an undetermined amount given the lack of information.