Refer to the above figure. Suppose the economy is in equilibrium at point A. If rational expectations exist, an increase in aggregate demand caused by an anticipated increase in the money supply will cause the economy to
A. stay at point A.
B. move to point B.
C. move to point C.
D. move to point D.
Answer: C
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If a firm is an oligopolist, which is NOT true?
A) It must pay attention to other firms' prices. B) It is one of a relatively small number of firms dominating its industry. C) It can sell all the units it wants at the going market price. D) It is engaged in a strategic game.
What is the percentage of income received by the upper two quintiles on line L?
In general, the more the substitutes available for a good
A. the more inelastic the demand for the good. B. the more elastic the demand for the good. C. the greater the demand for the good. D. the less the demand for the good.
All of the following are assumptions of both market and public-sector decision making EXCEPT
A) Decisions are based on majority rule. B) Decisions are motivated by individuals' self-interest. C) Opportunity costs exist in decisions. D) Choices reflect incentives faced by decision makers.