Which of the following is an example of a monopolistically competitive firm?
A. Farmer Smith's corn farm
B. Tino's Italian eatery, a local restaurant
C. TCI Cablevision, a supplier of cable television services
D. Northwest Electricity, a supplier of electricity in the Northwest U.S.
Answer: B
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Refer to Figure 29-1. Currency speculators believe that the value of the euro will decrease relative to the dollar. Assuming all else remains constant, how would this be represented?
A) Supply would increase, demand would increase and the economy moves from D to A to B. B) Supply would decrease, demand would increase and the economy moves from A to D to C. C) Supply would increase, demand would decrease and the economy moves from C to B to A. D) Supply would decrease, demand would decrease and the economy moves from B to C to D.
When a Japanese resident buys a good or service from a U.S. producer, there is a(n)
A) increase in the supply of yen in the foreign exchange market. B) decrease in the supply of yen in the foreign exchange market. C) increase in the demand for yen in the foreign exchange market. D) decrease in the demand for yen in the foreign exchange market.
Which of the following is false?
a. Rational expectations theory suggests that government economic policies designed to alter aggregate demand to meet macroeconomic goals are of very limited effectiveness, because when policy targets become public, people will alter their own behavior from what it would otherwise have been, and in so doing, they largely negate the intended impact of policy changes. b. If changes in inflation surprise people, they will have little effect on unemployment or real output in the short run. c. An unanticipated increase in AD as a result of an expansionary monetary policy stimulates real output and employment in the short run, but an anticipated increase in AD does not. d. Unanticipated increases in AD expands output and employment in the short run, but only increases the price level in the long run.
The concept of free trade is based on the principle that countries should specialize in the production of goods for which the
a. absolute advantage is highest b. absolute advantage is lowest c. opportunity cost is highest d. opportunity cost is lowest e. consumers have the highest demand