Suppose the AC curve is U-shaped. Then an increase in a recurring fixed cost will cause the AC curve to shift up, with its lowest point shifting to the right.
Answer the following statement true (T) or false (F)
True
Rationale: The new AC curve will converge to the original one (as the increase in the FC becomes smaller and smaller on average) -- and this implies that the original AC curve shifts up, with the lowest point shifting to the right.
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Advocates of discretionary policy make these criticisms of the economy's "self-correcting" mechanism:
a. it is slow b. it is not very reliable c. it works only when supplemented by automatic stabilizers d. All of the above are correct. e. a and b only are correct.
One of the strengths of monetary policy relative to fiscal policy is that monetary policy:
A. can be implemented more quickly. B. is subject to closer political scrutiny. C. does not produce a net export effect. D. entails a larger spending income multiplier effect on real GDP.