If the price of the output produced by a perfectly competitive firm increases, then:
a. the marginal-cost curve will shift up.
b. the demand curve faced by the firm will shift to the left.
c. marginal cost will fall as output declines.
d. the marginal-revenue curve for the firm will shift up.
e. the marginal-cost curve for the firm will shift down.
d
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Comparing the examples of Denmark and the United Kingdom in relationship to the European Monetary Union, the krone is pegged to the euro, whereas the British pound is not. What can be predicted then about their interest rates?
a. The United Kingdom has the ability to set its own interest rates and pursue an independent monetary policy, whereas Denmark's rates are virtually the same as those of the euro. b. Denmark gets the benefits of having fixed exchange rates as well as having an independent monetary policy and the ability to set its own rates of interest. c. Denmark's price level in the long run will be much higher than the Eurozone because it has to keep exchange rates fixed. d. The United Kingdom will discover that it cannot lower its own interest rates after all, or the pound will depreciate so far that no investors will make investments in the United Kingdom.
A contractionary fiscal policy is likely to
A) reduce a government budget deficit and reduce borrowing by the Treasury. B) increase a government budget deficit and increase borrowing by the Treasury. C) reduce a government budget deficit and increase borrowing by the Treasury. D) increase a government budget deficit and reduce borrowing by the Treasury.