Ignoring the government and foreign sectors, equilibrium real Gross Domestic Product (GDP) is determined by
A. the intersection of the planned saving and planned consumption schedules.
B. the intersection of the consumption function with the 45-degree line.
C. finding the real Gross Domestic Product (GDP) for which real savings are zero.
D. the intersection of the planned saving and planned investment schedules.
Answer: D
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In markets free from intervention, prices tend to move towards equilibrium because of
A) the "helping hand" of government. B) increased demand from buyers. C) increased supply by sellers. D) the unintended consequences of choices among buyers and sellers pursuing their own plans.
The figure above shows the demand and cost curves for a single-price monopoly. Which of the following statements is FALSE?
A) To maximize its profit, the firm will set marginal revenue equal to zero by producing 12.5 units. B) The firm will make an economic profit. C) The firm is a not a natural monopoly. D) The firm will set price where demand is elastic.