In perfect competition, which is NOT true?
A. Firms are price-takers.
B. There are a large number of firms.
C. Firms produce homogeneous goods.
D. Every firm has a small but perceivable market power.
Answer: D
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The long-run aggregate supply curve is ________ because along it, as prices rise, the money wage rate ________
A) vertical; falls B) vertical; rises C) upward sloping; falls D) upward sloping; stays constant
The narrowest definition of the money supply is
A) M1. B) M2. C) the difference between M2 and M1. D) the sum of M1 and M2.
The firm's expansion path records:
a. profit-maximizing output choices for every possible price. b. cost-minimizing input choices for all possible output levels for when input rental rates expand along with production. c. cost-minimizing input choices for all possible output levels for a fixed set of input prices. d. cost-minimizing input choices for profit-maximizing output levels.
If the Fed wants to reverse the effects of a favorable supply shock on the inflation rate, it should
a. increase the money supply growth rate which also moves unemployment closer to its natural rate. b. increase the money supply growth rate, but this moves unemployment further from its natural rate. c. decrease the money supply growth rate which also moves unemployment closer to its natural rate. d. decrease the money supply growth rate, but this moves unemployment further from its natural rate.