In the classical model, how do shifts in aggregate demand affect real GDP?
A. Increases in aggregate demand decrease real GDP.
B. Increases in aggregate demand increase real GDP.
C. Real GDP will remain unchanged.
D. Decreases in aggregate demand increase real GDP.
Answer: C
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If an industry has a Herfindahl index of 10,000, then
A. the industry is a single firm. B. it is perfectly competitive. C. it is considered a duopoly. D. it is considered an oligopoly.
Cooperation is difficult to achieve in a Prisoners' Dilemma because each player thinks the other player might not cooperate.
Answer the following statement true (T) or false (F)
Firms price discriminate
A) to take advantage of customers. B) to reduce the quantity sold so as to reduce production costs. C) to increase profits. D) to increase total economic surplus.
Empirical studies of production suggest that the long-run average cost curve
a. is U-shaped b. has an inverted L shape c. is L-shaped d. is horizontal e. shows diminishing marginal returns