Higher interest rates motivate:
A. individuals to spend more on consumption goods.
B. individuals to spend more on capital goods.
C. firms to invest less in new factories and working capital.
D. firms to invest more in new factories and working capital.
Answer: C
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Answer the following statement(s) true (T) or false (F)
1. When a monopoly supplier acquires a monopoly manufacturer, the vertical merger intensifies the supplier's use of monopoly power over the manufacturer. 2. A buy-out is more likely to delay a rival's reemergence than is predatory pricing. 3. Economic analysis suggests that resale price maintenance is primarily used by manufacturers to keep prices artificially high. 4. A firm has the incentive to cheat on a cartel agreement only when it fears that other cartel members will also cheat. 5. The Prisoners' Dilemma game is another situation where the Invisible Hand Theorem is true.
Tom and Jerry are the only members of society. The table above shows their marginal benefits from defense satellites, a public good. What is the marginal benefit to society from the fourth satellite?
A) $36 B) $20 C) $18 D) $4
Lucas and Sargent argue that the short-run trade-off between unemployment and inflation is caused by
A) workers and firms rapidly adjusting wages and prices in response to changes in expectations. B) workers and firms using all the information available to predict inflation. C) workers and firms being fooled by unexpected changes in monetary policy. D) workers and firms using Fed policy to predict inflation.
One characteristic of a monopoly market is that the product is virtually identical to products produced by competing firms
a. True b. False Indicate whether the statement is true or false