General equilibrium analysis is the study of
A) how an equilibrium is determined in all markets simultaneously.
B) how an equilibrium is determined in all closely related markets.
C) the effects of a change in a market, and all spillover effects in all related markets.
D) Any of the above.
D
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If the economy is falling below potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in
A) government purchases. B) oil prices. C) the money supply and a decrease in interest rates. D) taxes.
Which of the following statements best explains why long-run average cost is never greater than short-run average cost?
A) In the long run, tangency of the isocost and isoquant is attainable. This is not necessarily true in the short run. B) In the long run, diseconomies of scale might not occur, but in the short run diminishing marginal returns do. C) In the long run, the cost of capital declines because the firm is able to pay down some of its debts. D) In the long run, the average cost curve need not be U-shaped, but in the short run it is.