The simultaneous export and import of airplanes by the United States is an example of

A perfectly competitive industry achieves allocative efficiency in the long run. What does allocative efficiency mean?

A) Firms use an input combination that minimizes cost and maximizes output. B) Each firm produces up to the point where all scale economies are exhausted. C) Each firm produces up to the point where the price of the good equals the marginal cost of producing the last unit. D) Production occurs at the lowest average total cost.

The real interest rate for investments reflects not only the short-term real interest rate set by the central bank, but also the financial frictions

When the policy rate has hit the floor of zero, to stimulate the economy at given inflation rates, policymakers can A) lower the financial frictions. B) lower the short-term real interest rate. C) lower both the short-term real interest rate and the financial frictions. D) lower the policy rate.