Refer to the graphs, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve, respectively. All numbers are in billions of dollars. The interest rate and the level of investment spending in the economy are at point D on the investment demand curve. To achieve the long-run goal of a noninflationary full-employment output Qf in the economy, the Fed should try to:
A. Decrease aggregate demand by increasing the interest rate from 2 to 4 percent
B. Decrease aggregate demand by increasing the interest rate from 4 to 6 percent
C. Increase aggregate demand by decreasing the interest rate from 4 to 2 percent
D. Increase the level of investment spending from $120 billion to $150 billion
B. Decrease aggregate demand by increasing the interest rate from 4 to 6 percent
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Gene's Car Wash is a natural monopoly. To wash 100 cars a week, if Gene is unregulated, he would charge a price of $10. Gene's long-run average cost for washing 100 cars is $8, his average variable cost is $6, and his marginal cost is constant at $4
If Gene was regulated using a marginal cost pricing rule, the price he would be allowed to charge to wash 100 cars is A) $10. B) $8. C) $6. D) $4.
In the early stages of a recession, what type of unemployment gets larger?
A. Seasonal. B. Frictional. C. Structural. D. Cyclical.