Macroeconomics Answers

QUESTION 16

At any level of output, the average variable cost curve:

1. Will be increasing.
2. Will be decreasing.
3. Will be constant.
4. Will be honest.
5. Will lie below the curve for average total cost.

QUESTION 17

The point of transition between where marginal cost is pulling average total cost down and where it is pulling it up:

1. Occurs at all levels of production.
2. Must occur at the maximum point of the average total cost curve.
3. Must occur at the minimum point of the average total cost curve.
4. Must not occur on the average total cost curve.
5. Needs help paying its bills. 

QUESTION 18

Fixed costs are often:

1. Simply errors made by accountants.
2. Invented by economists to overemphasize profits.
3. Mistaken for variable costs by seasoned businesspeople.
4. Variable costs.
5. Sunk costs that a firm cannot recoup.

QUESTION 19

This tells a firm whether it can earn profits given the current price in the market.

1. Average cost.
2. Variable cost.
3. Fixed cost.
4. Total cost.
5. No cost.

QUESTION 20

This helps producers understand how increasing or decreasing production affects profits.

1. Average cost.
2. Variable cost.
3. Fixed cost.
4. Total cost.
5. Marginal cost.

QUESTION 21

Because all costs are variable, the long run production function:

1. Shows the most efficient way of producing any level of output.
2. Only exists in fairytales.
3. Cannot help us in any way.
4. Represents costs as fixed.
5. All of the above.

QUESTION 22

The long run depends on the specifics of the firm in question:

1. But it can never be longer than one year.
2. But it must always be shorter than one year.
3. But it can never be longer than five years.
4. But it can never be shorter than five years.
5. It is not a precise period of time.

QUESTION 23

Physical capital and labor:

1. Cannot simultaneously exist.
2. Are mutually exclusive inputs.
3. Can only serve as complements to each other.
4. Can often serve as substitutes for each other.
5. Are better than bacon.

QUESTION 24

What determines whether an employer is likely to use production technologies that conserve on the number of workers or technologies with more workers and less machinery?

1. The length of the short run.
2. The length of the long run.
3. The cost of labor in the particular location.
4. The religious beliefs of the business’ owners.
5. The length of time the firm has been in operation.

QUESTION 25

Economies of scale exist:

1. When the demand for scales is high.
2. When the supply of scales is high.
3. When the larger scale of production leads to lower average costs.
4. When the larger scale of production leads to higher average costs.
5. When fish sell off their outerwear.

QUESTION 26

The long-run average cost curve will be the least expensive average cost curve:

1. Only if the employer is in Greece.
2. For any level of output.
3. Only at certain levels of output.
4. Only at the highest levels of output.
5. In the case of a shortage. 

QUESTION 28

The shape of the long-run average cost curve:

1. Is different for firms producing goods than for firms producing services.
2. Is identical for all firms.
3. Has implications for how many firms will compete in an industry.
4. Determines precisely how many firms will compete in an industry.
5. Is a bell curve.

QUESTION 29

People and economic activity are concentrated in cities because:

1. The climate is better there.
2. Geography teachers promote city life.
3. Grouping economic activity is more productive in many cases.
4. Dispersing economic activity is more productive in many cases.
5. All of the above.

QUESTION 30

The shape of the long-run average cost curve reveals whether competitors:

1. Will collude on prices.
2. Will collude on output.
3. In the market will be different sizes.
4. Will play fairly.
5. Will eat crow.

QUESTION 24

1. What determines whether an employer is likely to use production technologies that conserve on the number of workers or technologies with more workers and less machinery?
2. The length of the short run.
3. The length of the long run.
4. The cost of labor in the particular location.
5. The religious beliefs of the business’ owners.
6. The length of time the firm has been in operation.

QUESTION 25

1. Economies of scale exist:
2. When the demand for scales is high.
3. When the supply of scales is high.
4. When the larger scale of production leads to lower average costs.
5. When the larger scale of production leads to higher average costs.
6. When fish sell off their outerwear.

QUESTION 26

1. The long-run average cost curve will be the least expensive average cost curve:
2. Only if the employer is in Greece.
3. For any level of output.
4. Only at certain levels of output.
5. Only at the highest levels of output.
6. In the case of a shortage.

21

1. Because all costs are variable, the long run production function:
2. Shows the most efficient way of producing any level of output.
3. Only exists in fairytales.
4. Cannot help us in any way.
5. Represents costs as fixed.
6. All of the above.

22

1. The long run depends on the specifics of the firm in question:
2. But it can never be longer than one year.
3. But it must always be shorter than one year.
4. But it can never be longer than five years.
5. But it can never be shorter than five years.
6. It is not a precise period of time.

23

1. Physical capital and labor:
2. Cannot simultaneously exist.
3. Are mutually exclusive inputs.
4. Can only serve as complements to each other.
5. Can often serve as substitutes for each other.
6. Are better than bacon.

LM equation specified with Money demand L = 0.20 Y – 4i and money supply is $144.

IS equations for a two sector model specified as C= 90£ + 0.75 Y and I= 140£ – 5i and the second with C= 90£ + 0.75Y and I= 120£ – 3i.

    What does LM and IS means? Calculate the LM and the two IS equations.

    Plot LM and the two IS curves

    Plot the new LM equation and label it LM1 for the 15£ increase in Ms.

     Use the IS equations and find output when the Ms increases to 159£. For which IS equation is there a greater decrease in the rate of interest?

     Find investment and consumption spending when Ms is 144£ and when Ms is 159£.

     The increase in the Ms causes a shift in the LM or the IS curve? Why? And what is called?

   What happened to IS and LM curves is G increased by 10£?

Describe in detail the equilibrium process of the open economy Keynesian 

model. Draw all graphs and indicate the process both graphically and 

mathematically.

How many years an investment would be four times its initial value at an interest rate of 11 percent.

Q:1 An investor deposits a sum of Rs 100,000 in an investment company with a promise of a rate of return of 18 percent per year. What will the sum amount be at the end of 5 years if the interest is added (i) yearly,(ii) six-monthly, (iii) quarterly, (iv) monthly, and (v) continuously.

• From the information given in Question #1, if the investor decides to withdraw the accumulated interestat the end of each year, what would be his yearly earnings from the investment if added (i) yearly, (ii) sixmonthly,(iii) quarterly, (iv) monthly, and (v) continuously?