In a competitive market,
A. Neither buyers nor sellers have market power.
B. Buyers and sellers both have market power.
C. Sellers don't have market power but buyers do.
D. Buyers don't have market power but sellers do.
Answer: A
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If a consumer is relatively insensitive to changes in the price of a good, then the consumer's demand for the good is
A) elastic. B) unit elastic. C) inelastic. D) perfectly elastic.
Surpluses cause prices to rise while shortages cause prices to fall
a. True b. False Indicate whether the statement is true or false
A Portuguese company exchanges euros for $60,000 from a U.S. bank. The Portuguese firm then uses the dollars to purchase $60,000 of canning equipment from a U.S. company. As a result of these two transactions alone
a. both U.S. net capital outflow and U.S. net exports rise. b. U.S. net capital outflow rose and U.S. net exports fall. c. U.S. net capital outflow fell and U.S. net exports rise. d. both U.S. net capital and U.S. net exports fall.
If businesses and consumers become pessimistic, the Federal Reserve can attempt to reduce the impact on the price level and real GDP by
a. increasing the money supply, which raises interest rates. b. increasing the money supply, which lowers interest rates. c. decreasing the money supply, which raises interest rates. d. decreasing the money supply, which lowers interest rates.