Any point outside the production possibilities frontier is called
A) unobtainable.
B) full employment.
C) unemployment.
D) inefficient.
A
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Refer to Figure 12-5. The figure shows the cost structure of a firm in a perfectly competitive market. If the firm's fixed cost increases by $1,000 due to a new environmental regulation, what happens to its profit-maximizing output level?
A) It remains the same. B) It decreases. C) It increases. D) It could increase, decrease, or remain constant, depending on whether the firm is able to cut costs somewhere else.
Suppose the price level is fixed, the MPC is .8, and the GDP gap is a negative $200 billion. To achieve full-employment output (exactly), government should:
A. increase government expenditures by $200 billion. B. reduce taxes by $200 billion. C. increase government expenditures by $40 billion. D. reduce taxes by $160 billion.