Which of the following will be counted as an investment expenditure in the measurement of GDP?
A) purchase of a tractor by a farmer from his neighbor
B) purchase of preferred stock in ABC Corporation
C) purchase of a newly built tractor by a college fraternity for hay rides at their charity fair
D) purchase of an apartment in a newly-built building
E) purchase of newly built computers by a municipal government
D
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We collapse the consumer's current-period and future-period budget constraints into a single lifetime budget constraint by
A) assuming no default. B) substituting for savings. C) eliminating consumption smoothing. D) assuming the consumer knows the future.
In an oligopoly, producers' agreements to restrict output tend to be unstable because each firm has an incentive to
A. raise its price above the cooperative price. B. establish competitive price and output levels. C. produce more than its output quota. D. lower both its price and its output.
Collusion among monopolistic firms:
A. Is common in world markets, but does not happen in the U.S. B. Becomes more difficult if there were fewer firms in the group C. Becomes easier during a recession when sales are falling D. Becomes more difficult if the firms all have different cost and demand curves
Entry into a market characterized by monopolistic competition
A. Is frequent because barriers to entry are low. B. Occurs when a firm's demand is everywhere below its long-run average cost curve. C. Is rare because firms have market power. D. Results from economies of scale.