The owner of a perfectly competitive firm that is earning economic losses in the short run
A) should alter the rate of output in order to increase profitability.
B) should cut his own salary in order to reach the break-even point.
C) is actually losing more than he thinks because not all of the implicit costs have been considered.
D) is earning less than he would if he worked for someone else.
D
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In recent decades, the trend among central banks has been to adopt ________
A) high employment as a central goal B) a dual mandate that gives equal weight to both price stability and low unemployment. C) price stability as a central goal D) a target of zero inflation E) none of the above
When prices rise, consumers and businesses hold larger money balances. This reduces the supply of loanable funds, increases the interest rate, and discourages both consumption and investment. This process is called the:
a. interest-rate effect. b. real balance effect. c. investment effect. d. disinvestment effect.