The long-run average cost curve is the
A) change in total product divided by the change in capital when the quantity of labor is constant.
B) change in output resulting from a one-unit increase in the quantity of capital.
C) relationship between the lowest attainable average total cost and output when both the plant size and labor are varied.
D) relationship between the lowest attainable average total cost and output when both the plant size and labor are fixed.
C
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Imagine that the economy is at a point that is above both AA and DD, where both the output and asset markets are out of equilibrium. Which first action is TRUE?
A) The economy will stay at this level in the short run. B) The exchange rate will first drop to a point on the AA schedule. C) The exchange rate will first move to a point on the DD schedule. D) The AA-DD equilibrium will shift to the position of the economy. E) The exchange rate will first move left to a position on the AA schedule.
Changes in which of the following variables will cause the current nominal exchange rate to change?
A) the future expected long-run nominal exchange rate, Eet+n B) future expected domestic nominal interest rates C) future expected foreign nominal interest rates D) all of the above