Suppose that a firm earned $500,000 in total revenue. At the same time, it incurred labor costs of $200,000; economic depreciation of $50,000; normal profit of $75,000; interest paid to the bank of $25,000; and used other factors of production that
cost $100,000. The economic profit earned by the firm equals A) $275,000.
B) $175,000.
C) $50,000.
D) $200,000.
E) $500,000.
C
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If the interest rate increased, which of the following would occur?
a. Nothing would occur. b. The consumption-income line would shift downward. c. The consumption-income line would shifts upward. d. There would be an rightward movement along the consumption-income line. e. There would be a leftward movement along the consumption-income line.
The aggregate demand curve shows the relationship between the ________ and ________
A) inflation rate; quantity of real GDP demanded B) real interest rate: quantity of real GDP supplied C) nominal interest rate; quantity of real GDP demanded D) price level; quantity of real GDP demanded