Total cost of production is the sum of total variable cost and total fixed cost. If the total fixed cost alone increases:
A. the average total cost curve shifts downward at all output levels.
B. the marginal cost curve shifts upward at all output levels.
C. the vertical distance between the average total cost curve and average variable cost curve increases at all output levels.
D. the average variable cost curve shifts upward at all output levels.
Answer: C
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If a country increases its savings rate, the steady-state equilibrium level of:
A) GDP will increase. B) investment will decrease. C) capital stock will decrease. D) efficiency units of labor will increase. Consider two economies: A and B. Both the countries have access to the same aggregate production function and have the same population and same efficiency units of labor, but have different saving rates. The savings rate is higher in country A in comparison to country B.
The Great Depression, in which real GDP fell and unemployment rose, can be characterized as a ________
A) inflationary gap B) long-run equilibrium C) recessionary gap D) full-employment equilibrium