In a market with barriers to entry:
A. the implications of Adam Smith's theory of the invisible hand can be expected to hold.
B. prices will direct productive resources toward underserved markets.
C. firms will earn zero economic profit in the long run.
D. economic profit will not fall to zero in the long run.
Answer: D
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In the short run, the government deficit spending will most likely
A) raise the unemployment rate B) lower the inflation rate C) raise real interest rates D) lower private savings E) raise net exports
The slope of the production possibilities curve is positive if there is free trade.
a. true b. false
Cost-push inflation is due to:
A. "too much money chasing too few goods". B. the economy operating at full employment. C. increases in production costs. D. excess total spending.
The price of a new textbook increased from $100 to $120 in one year, while the price of a used textbook increased by 10 percent. What happened to the relative price of a used textbook?
A. It remained constant. B. It increased by 10 percent. C. It decreased by 20 percent. D. It can't be determined without knowing the nominal price of the used textbook in at least one of the years.