In the expansion phase of a business cycle:
A. The inflation rate decreases, but productive capacity increases
B. The inflation rate and productive capacity decrease
C. Employment increases, but output decreases
D. Employment and output increase
D. Employment and output increase
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In the Keynesian model when desired investment exceeds desired saving,
A) inventories rise. B) inventories fall. C) the price level rises. D) the price level falls.
Suppose you are deciding whether or not to increase production. You are currently making a profit. If you produce one more unit, your increase in cost will be $10, your average variable costs will increase to less than that, and your average fixed costs will decrease. Finally, your average revenue will increase to $12, but your increase in revenue will be $11. You should
A. increase production by at least 1 unit. B. leave production unchanged because profit is maximized where you are. C. increase production by exactly 1 unit. D. redo the math associated with decreasing production because that may result in greater profit.