A firm using Baumol's model will do one of the following if the interest rate on short-term securities went up.
A) increase the collection period
B) decrease the average cash balance
C) increase the average cash balance
D) decrease the collection period
Answer: B) decrease the average cash balance
Economics
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At the profit-maximizing level of output, marginal profit
A) is also maximized. B) is zero. C) is positive. D) is increasing. E) may be positive, negative or zero.
Economics
Refer to the above figure. If the relevant aggregate demand curve was AD2, the government could do all of the following to close the existing gap EXCEPT
A) increase government spending on roads. B) reduce marginal tax rates. C) reduce corporate taxes. D) reduce defense spending.
Economics