The long-run average cost curve
A) is the sum of a firm's short-run average cost curves.
B) shows the lowest average cost facing a firm as it increases output changing both its plant and labor force.
C) initially rises when output increases and then falls when output increases.
D) always falls as output increases.
E) always rises as output increases.
B
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Assuming that there are NO income taxes, if both autonomous taxes, and government expenditures were to rise by $100 million, we would expect equilibrium GDP to
A) rise by $100 million. B) rise, but by a multiple of $100 million. C) rise by less than $100 million. D) remain unaffected because leakages have changed by the same amount.
If the multiplier is 5, then the marginal propensity to consume (MPC) is
A. 0.5. B. 0.8. C. 1.0. D. 0.2.