Suppose the economy is producing below potential GDP and the Federal Reserve implements the appropriate change in monetary policy, but not until after the economy has started to recover from the recession. In this situation there is a real danger that
A) the Fed's expansionary policy will result in too small of an increase in GDP.
B) the Fed's expansionary policy will result in too large of an increase in GDP.
C) the Fed's contractionary policy will result in too large of a decrease in GDP.
D) the Fed's contractionary policy will result in too small of a decrease in GDP.
B
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Limited liability can best be defined as the legal provision that
A) shields owners of a corporation from losing more than what they invested in a firm. B) protects bond holders from being sued by other creditors. C) gives holders of preferred stock priority over holders of common stock. D) reduces the exposure of sole proprietorships to law suits.
If a firm is producing an output rate at which marginal cost is equal price, the firm
A) is maximizing profits. B) should increase its output level. C) should reduce its output level. D) will not be covering its fixed cost.