The usefulness of the price-taker model requires that the firm's decision makers
a. act to maximize their total revenue and fully understand marginal costs and marginal revenues.
b. be able to draw accurate marginal cost and marginal revenue curves.
c. place the social interest of the economy above their individual self interests.
d. seek to maximize the profits of the firm.
D
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The direction of change in the trade balance is uncertain because expansionary monetary policy may exert forces in the opposite direction. What are they?
A) An increase in income tends to lower the trade balance, whereas a fall in interest rates through depreciation tends to raise the trade balance. B) An increase in the supply of money raises interest rates, which lowers the trade balance, whereas the increase in the demand for money raises it. C) Exchange rates rise (depreciation) and expected exchange rates fall (appreciation). D) An increase in financial assets raises foreign inflows and raises the trade balance, whereas decreases in interest rates lower the trade balance.
The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole
a. is a basic principle regarding individual decisionmaking. b. amounts to a denial of one of the basic principles regarding interactions among people. c. supports the idea that the "invisible hand" should guide economic activity. d. was promoted by the economist Adam Smith in a well-known 1776 book.