A monopolistic competitive firm is inefficient because the firm:
A. earns positive economic profit in the long run.
B. is producing at an output corresponding to the condition that marginal cost equals price.
C. is not maximizing its profit.
D. produces an output where average total cost is not minimum.
Answer: D
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By the time Paul Volcker took office as the new Federal Reserve chairman in 1979, the inflation rate exceeded 10%. By the end of 1986 the inflation rate had been brought down to 1.9%. Which of the following is true about the Volcker Disinflation?
A) lower inflation resulted from a tightening of monetary policy B) by raising the federal funds rate to over 20%, the Federal Reserve stimulated the economy resulting in lower levels of both inflation and the unemployment rate by the early 1980s C) the unemployment rate was brought down by 1982 but it took longer to reach lower inflation rates D) all of the above E) none of the above
An argument against inflation targeting is that
a. the Fed does not completely control inflation. b. it rules out stabilization policy. c. puts too much emphasis on low inflation. d. All of the above
A country's imports are sensitive to its level of domestic income
a. True b. False Indicate whether the statement is true or false
Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?
a. an increase in the price of crude oil, a key ingredient required for the production of gasoline b. the introduction of a miracle carburetor that substantially improves the gas mileage of automobiles c. a recession that substantially reduces the income of households d. an increase in the popularity and use of Sport Utility Vehicles that consume a lot of gasoline per mile driven