Author Question: If the Fed increases the quantity of money and lowers the federal funds rate, real GDP ________ and ... (Read 111 times)

OSWALD · **on:** Jun 29, 2018

If the Fed increases the quantity of money and lowers the federal funds rate, real GDP ________ and the price level ________.

A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) increases; does not change

Question 2

With regard to its profits and losses, how is the short run different from the long run for a perfectly competitive firm?

What will be an ideal response?

miss_1456@hotmail.com · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

A

Answer to Question 2

The firm can make an economic profit, incur an economic loss in the short run, or make zero economic profit in the short run. In the long run, however, the only possible outcome is making zero economic profit. An economic profit attracts entry by new firms and economic losses lead to exit by some firms. Thus, after entry or exit is complete in the long run, the remaining firms will earn zero economic profit.