According to the classical view, if consumer demand slowed down,
A. Investment and government demand would increase, and the economy would return to its long-term growth trend.
B. Wages would increase, and the economy would return to its long-term growth trend.
C. Prices would increase, and the economy would return to its long-term growth trend.
D. Prices would decrease, and the economy would return to its long-term growth trend.
Answer: D
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A profit-maximizing firm in the short run will expand output:
A. Until marginal cost begins to rise B. Until total revenue equals total cost C. Until marginal cost equals average variable cost D. As long as marginal revenue is greater than marginal cost
Which of the following statements is NOT true?
A. Economic theory often makes unrealistic assumptions. B. Economists ignore details to focus on complex problems. C. Abstraction is not an important part of economic analysis. D. The word theory means different things to economists and to ordinary people.