Think about a publishing firm that uses labor, ink, paper, and electricity as its variable inputs, and rents building space and printing presses as its fixed inputs. Describe how this publisher's short-run response to an increase in its labor costs would differ from its short-run response to an increase in one of its fixed costs
Although both types of cost increases will drive the firm's profits down, it will only respond to the increase
in the variable cost in the short run. The higher labor cost will shift the firm's ATC, AVC, and MC curves
upward, and will induce the firm to reduce production in the short run. The higher fixed cost will not move
the MC curve, and therefore will not lead to a change in output in the short run.
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Under a fixed exchange rate regime, an expansionary fiscal policy would ____ interest rates and GDP, which would cause ____ pressure on the exchange rate, forcing the monetary authority to undertake a(n) ______ monetary policy.
A) raise; downward (appreciation); expansionary B) lower; upward (depreciation); contractionary C) raise; upward (depreciation); contractionary D) lower; downward (appreciation); expansionary
Refer to the information provided in Figure 18.1 below to answer the question(s) that follow.
Figure 18.1Refer to Figure 18.1. The third fifth of families earned ________% of income in Outland.
A. 12 B. 23 C. 25 D. 35