In a bakery for a given amount of croissant production, an additional pastry worker produces 100 additional croissants, and one extra mixing machine produces 50 extra croissants. Each pastry worker costs $30 to hire, and a mixing machine costs $10 per unit. The bakery owner should
A. produce fewer croissants.
B. hire an additional pastry worker.
C. purchase an additional mixing machine and use one less pastry worker.
D. hire an additional pastry worker and sell a mixing machine.
Answer: C
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If the proportion of bad borrowers increases,
A) the lending interest rate increases. B) the lending interest rate decreases. C) the borrowing interest rate increases. D) the borrowing interest rate decreases.
All of the following are likely to be effective at eliminating a recessionary gap except one. Which is the exception?
a. Reducing Social Security payments to beneficiaries b. Reducing personal income taxes c. Increasing government expenditures on the interstate highway network d. Increasing farm subsidies e. Reducing corporate income taxes