Limit pricing will effectively deter entry when:
A. the incumbent links the pre-entry price to post-entry profits.
B. the entrant must commit to enter the market.
C. the incumbent has incomplete information.
D. All of the statements associated with this question are correct.
Answer: A
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According to the new classical view, budget deficits will
a. cause real interest rates to rise, which will decrease aggregate demand, output, and employment. b. lead to an expansion in spending, which will stimulate both real output and employment. c. fail to stimulate aggregate demand because people will save more in order to pay the higher future taxes implied by the expansion in government debt. d. lead to inflation because the deficits expand the money supply.
Net exports is a positive number in the national income accounts when
A. imports exceed exports.
B. exports exceed imports.
C. national income exceeds personal income.
D. capital consumption exceeds net investment.
When two goods are perfect substitutes, the indifference curve is
a. a horizontal straight line. b. bowed outward. c. a downward-sloping straight line. d. a right angle.
Which of the following is a regressive tax?
A. a state tax of 5 percent of income B. a local sales tax of 5 percent C. the federal individual income tax D. a federal flat tax of 30 percent