The welfare loss created by monopolistically competitive markets:
A. is a hotly debated topic among economists.
B. is a huge concern to governments.
C. has a widely accepted form of measurement.
D. is usually not a huge concern to governments.
Answer: D
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Firms consider the ________ wage when considering whether to hire additional units of labor
A) minimum B) real C) normal D) nominal
Suppose real GDP is $800 billion when the MPC is 0.80, and people decide to increase their saving by $30 billion. Before this change, the economy was in equilibrium with people intending to save $100 billion and producers intending to invest $100 billion. The new equilibrium level of real GDP is:
a. $600 billion. b. $650 billion. c. $680 billion. d. $730 billion. e. $800 billion.
A fiscal expansion (e.g. a tax cut) will result in an increase in income, an increase in money demand, and an increase in the equilibrium interest rate in financial markets. Explain what happens to the position of the LM curve as policy makers pursue expansionary fiscal policy
What will be an ideal response?
Assume that policy makers are pursuing a fixed exchange rate regime. Now suppose that the foreign interest rate falls. Discuss what policy makers must do to maintain the pegged exchange rate. Also discuss what effect this will have on domestic output and net exports
What will be an ideal response?