Which of the following statements about the short-run production function is true?
A) MP always equals AP at the maximum point of MP.
B) MP always equals zero when TP is at its maximum point.
C) TP starts to decline at the point of diminishing returns.
D) When MP diminishes, AP is at its minimum point.
E) None of the above is true.
B
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If government expenditure increases by $200 billion and taxes simultaneously increase by $200 billion, then aggregate demand
A) remains the same. B) decreases no matter what happens to aggregate supply. C) increases no matter what happens to aggregate supply. D) increases only if aggregate supply increases. E) increases only if aggregate supply decreases.
Assume that Ford Motor Company engineers achieve a revolutionary technological breakthrough in the production process of automobiles. Which of the following is expected to take place?
a. A movement up along the existing supply curve for Ford automobiles b. The supply of Ford automobiles will remain unchanged c. An inward shift of the supply curve for Ford automobiles d. A downward movement along an existing supply curve for Ford automobiles e. An outward shift of the supply curve for Ford automobiles