Refer to Figure 15-12. In the dynamic AD-AS model, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in
A) potential real GDP levels lower than what would occur if no policy had been pursued.
B) inflation rates higher than what would occur if no policy had been pursued.
C) real GDP levels higher than what would occur if no policy had been pursued.
D) unemployment rates higher than what would occur if no policy had been pursued.
D
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If a firm is maximizing its profit and producing less than the output at which its average total cost is minimized, then that firm
A) must be suffering an economic loss. B) must be earning an economic profit. C) has excess capacity. D) is producing at its capacity output. E) must be earning a normal profit.
Which of the following situations can lead to a winner's curse?
a. A bid which is won by multiple bidders but fails to cover the expectations of the seller. b. A win which makes a player over-enthusiastic about further gambles. c. An overoptimistic bid which helps the bidder to win but fails to cover his costs. d. A win which makes the player risk-averse toward future gambles.