12. To reduce moral hazard, a firm may
(A) pay workers at a piece rate.
(B) offer a year-end bonus if firm profits are up.
(C)offer stock options.
(D) All of the above.

29. Suppose the total cost of producing T-shirts can be represented as TC = 50 + 2q. The average cost of the 5th T-shirt is. (A) 2. (B)12.(C)52.(D) 60.

30. When a firm produces 1000 widgets with total cost of $2000 and fixed cost of S1000, what is the average variable cost? The average variable cost is. (A) $2 (B) $I (C)$0.50 (D) $0.20

1. The three approaches to measuring economic activity are the (A) cost, income, and expenditure approaches. (B) product, income, and expenditure approaches. (C)consumer, business, and government approaches. (D) private, public, and international approaches.

2. Suppose output is $35 billion, government purchases are $10 billion, desired consumption is $15 billion, and desired investment is S6 billion. Net foreign lending would be equal to (A) -$4 billion. (B) -$2 billion. (C)$2 billion. (D) $4 billion.

3. The per-worker production function in the Solow model assumes (A) constant returns to scale and increasing marginal productivity of capital. (B) constant returns to scale and diminishing marginal productivity of capital. (C)increasing returns to scale and diminishing marginal productivity of capital. (D) decreasing returns to scale and diminishing marginal productivity of capital.

4. The idea that saving equals investment in the Solow model means that a steady state can be reached only when (A) s=k (B) s=n+d (C)sf(k) = (s + d)k. (D) sf(k) = (n + d)k.

5. The idea that the business cycle is recurrent means that (A) declines in economic activity tend to be followed by further declines, and growth in economic activity tends to be followed by more growth. (B) the standard pattern of contraction-trough-expansion-peak occurs again and again in industrial economies. (C)many economic variables to move together in a predictable way over the business cycle. (D) peaks and troughs of the business cycle occur at regular intervals.

6. In the long run, a reduction in labor supply would cause output to_______ and the aggregate price level to_______ .(A) fall； rise (B) fall； fall (C)rise； fall (D) rise； rise

7. A change that increases the real money supply relative to real money demand causes (A) the LM curve to shift down and to the right. (B) the LM curve to shift up and to the left. (C)the IS curve to shift down and to the left. (D) the IS curve to shift up and to the right.

8. A financial innovation, such as the introduction of money market mutual funds, which increases the liquidity of alternatives to money, would (A) increase money demand, shifting the LM curve up and to the left. (B) increase money demand, shifting the LM curve down and to the right. (C)decrease money demand, shifting the LM curve up and to the left. (D) decrease money demand, shifting the LM curve down and to the right.

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