One reason that many have not accepted Keynes' views about how the government should respond to economic downturns is that:
A. Keynes' arguments run often counter to popular economic intuition.
B. few economists are familiar with Keynes' work.
C. the debate has little to no policy relevance.
D. no economists believe that economic stimulus measures actually work.
Answer: A
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The economy's current rate of interest is 10 percent and a firm has $10,000 of owner-invested capital. Its total revenue is $5,000 and the firm's explicit costs are $3,000. From this we know that this firm's
A) accounting profit is $500. B) economic profit is $2,000. C) accounting profit is $12,000. D) economic profit is $1,000.
When a currency is overvalued, international reserves ________ and the country has a balance-of-payments ________.
A. increase; deficit B. decrease; surplus C. increase; surplus D. decrease; deficit