Unemployment compensation is:
A. an automatic stabilizer because it rises as income increases, slowing an economic expansion.
B. an automatic stabilizer because it falls as income decreases, slowing an economic contraction.
C. not an automatic stabilizer.
D. an automatic stabilizer because it falls as income increases, slowing an economic expansion.
Answer: D
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By looking at aggregate demand via its component parts, we can conclude that the aggregate demand curve is downward sloping because
A) a lower inflation rate causes the real interest rate to fall, and stimulates planned investment spending. B) a lower inflation rate causes the real interest rate to rise, and stimulates planned investment spending. C) a higher inflation rate causes the real interest rate to fall, and stimulates planned investment spending. D) a higher inflation rate causes the real interest rate to rise, and stimulates planned investment spending.
If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is
A) raise prices. B) lower prices to gain revenue from extra volume. C) shut down immediately, but not liquidate the business. D) shut down immediately and liquidate the business. E) continue operating, but plan to go out of business.