If the federal budget is initially balanced and government expenditures remain constant, then a decrease in GDP will
A) decrease tax revenues and create a budget surplus.
B) increase tax revenues and create a budget surplus.
C) decrease tax revenues and create a budget deficit.
D) increase tax revenues and create a budget deficit.
Ans: C) decrease tax revenues and create a budget deficit.
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In the above figure, technological progress that increases the expected profit will
A) shift the demand for loanable funds curve leftward. B) shift the demand for loanable funds curve rightward. C) have no effect on the demand for loanable funds curve. D) make the demand for loanable funds curve become horizontal.
If the price of its product falls below the minimum point on the AVC curve, the best a perfectly competitive firm can do is to
A) keep producing and incur an economic loss equal to its total variable cost. B) keep producing and incur an economic loss equal to its total fixed cost. C) shut down and incur an economic loss equal to its total variable cost. D) shut down and incur an economic loss equal to its total fixed cost.