Engineers for the Giffen Record Company Have Determined That a 35

question 284

Multiple Choice

Engineers for The Giffen Record Company have determined that a 35% increase in all compact disc inputs will cause a 45% increase in output. Assuming that input prices remain constant, you correctly deduce that such a change will cause ________ as output increases.

• A) average costs to increase
• B) average costs to decrease
• C) average costs to remain constant
• D) marginal costs to increase

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Definitions:

Reserve Requirement Ratio

The reserve requirement ratio is the fraction of deposits that banks are required to keep on hand as reserves, determined by the central bank.

Money Supply

The accrued sum of money resources in an economy at a particular moment, covering cash, coins, and the capital in checking and savings accounts.

Reserve Requirement

The minimum amount of reserves that banks must hold against deposits, as mandated by central banking authorities.

Money Supply

The all-encompassing amount of economic monetary assets at a designated time.