When firms have market power, it means that they:
A. can noticeably affect the market price.
B. do not affect the market quantity offered for sale.
C. can earn as much profit as they want.
D. are a price taker.
Answer: A
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
In the foreign exchange market, how does each of the following influences affect the demand for dollars and the demand curve for dollars?
a) an increase in the exchange rate. b) an increase in the U.S. interest rate. c) a fall in the expected future exchange rate.
Takeover of one firm by another
a. ties up the nation's capital wastefully. b. uses up the economy's credit supply. c. reduces the value of the acquired firm. d. changes ownership of the acquired firm.
Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model? a. The quantity of real loanable funds
per time period rises and nominal value of the domestic currency falls. b. The quantity of real loanable funds per time period falls and nominal value of the domestic currency remains the same. c. The quantity of real loanable funds per time period rises and nominal value of the domestic currency remains the same. d. The quantity of real loanable funds per time period rises and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.