Firms in long-run equilibrium in a perfectly competitive industry will produce at the low points of their average total cost curves because:
a. free entry implies that long-run profits will be zero no matter how much each firm produces.
b. firms seek maximum profits and to do so they must choose to produce where average costs are minimized.
c. firms maximize profits and free entry implies that maximum profits will be zero.
d. firms in the industry desire to operate efficiently.
c
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Which of the following is likely to happen to the demand curve for reserves if the federal funds rate increases?
A) The demand curve for reserves will shift to the right. B) The demand curve for reserves will shift to the left. C) There will be an upward movement along the demand curve for reserves. D) There will be a downward movement along the demand curve for reserves.
The aggregate expenditure model focuses on the short-run relationship between ________ and ________
A) unemployment; inflation B) planned inventories; unplanned inventories C) real spending; real GDP D) nominal spending; nominal GDP