A monopolistically competitive firm faces a relatively steeper demand curve than that of a perfectly competitive firm
a. True
b. False
Indicate whether the statement is true or false
True
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In a liquidity trap, expansionary monetary policy has __________ effect on output, and expansionary fiscal policy has __________ effect on output
A) no; no B) no; a strong C) a strong; no D) a strong; strong
In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3 . The
government is able to raise $750 per month in revenue from the tax. The deadweight loss from the tax is a. $250. b. $125. c. $75. d. $50.
If a country has a collapsing currency due to large budget deficits financed by monetary expansion, the cure is to
A) default on sovereign debt and restructure the economy. B) peg the currency to something different. C) cut the deficit and raise interest rates. D) increase the rate of inflation to reduce the real value of government debt.
The ratio of the prices of two products that a consumer would buy with a given fixed income is equivalent to the:
A. Marginal rate of substitution B. Slope of the budget line C. Income elasticity of demand for the two products D. Price elasticity of demand for the two products