A profit-maximizing firm in a monopolistically competitive market can earn positive, negative, or zero profits in the short run
a. True
b. False
Indicate whether the statement is true or false
True
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A supply shock that reduces labor productivity
A) causes accelerating inflation if the Fed attempts to maintain the original output level. B) will increase real wages if nominal wages are flexible. C) will reduce the level of output at the natural level of real GDP even if employment does not decline. D) A and C.
If banks faced a 100 percent reserve requirement, a $10,000 addition to banking reserves would increase the money supply by:
a. $100 b. $1,000. c. $10,000. d. $100,000.
When the minimum wage is set below the market equilibrium wage, it does not affect the market.
Answer the following statement true (T) or false (F)
A significant bank crisis in one Eurozone country is a problem for the ECB because:
A) it will violate its money supply growth rule if it tries to provide liquidity to that country's banks. B) it has no mandate to be a lender of last resort to financial institutions in the Eurozone. C) it has no ability to affect the money supply in Eurozone countries. D) its consensus decision-making process may prompt too rapid a reaction to a crisis in one country.