When firms are neither entering nor exiting a perfectly competitive market,
a. total revenue must equal total variable cost for each firm.
b. economic profits must be zero.
c. price must equal average variable cost for each firm.
d. Both a and c are correct.
b
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In the figure below, draw a short-run Phillips curve and a long-run Phillips curve if the expected inflation rate is 4 percent and the natural unemployment rate is 6 percent
Explain how the two change in the short run if: a. slower growth in aggregate demand causes a recession. b. the inflation rate increases. c. the natural unemployment rate increases.
Following the downgrade of U.S. debt by Standard & Poor's in August, 2011:
A) other rating agencies also downgraded U.S. debt B) interest rates spiked as investor's perception of risk increased C) investors didn't seem to be any more concerned about default risk than before the downgrade D) the U.S. implemented a plan to significantly reduce its budget deficit later that year