Do the assumptions of the perfectly competitive model describe all real-world markets? Explain
What will be an ideal response?
No, the assumptions of perfect competition do not always hold in real-world markets. There are cases where the market fails to produce an efficient outcome. This situation can be due to a number of reasons such as imperfect competition or externalities.
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Capital gains are
A. treated exactly like other sources of income. B. taxed differently than other sources of income. C. generally not associated with a "lock-in effect." D. only realized at death.
Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real GDP and monetary base in the context of the Three-Sector-Model? a. Real GDP rises and monetary base rises
b. Real GDP rises and monetary base falls. c. Real GDP and monetary base fall. d. Real GDP and monetary base remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The quantity of good M is measured along the vertical axis, and the quantity of good N is measured along the horizontal axis. If the prices of both goods M and N declines by 50% each, then the budget line
A) shifts inward to the left by 50%. B) shifts outward to the right by 50%. C) shifts outward to the right by 100%. D) rotates clockwise by 180 degrees.
If the reserve ratio is 20 percent and reserves in the commercial banking system increase by $20,000, the maximum possible expansion of demand deposits is
A. $500,000. B. $40,000. C. $4,000. D. $100,000.