In the short run, monopolistically competitive firms find their profit-maximizing quantity by setting price equal to marginal cost.
Answer the following statement true (T) or false (F)
False
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The relation between the nominal and real exchange rates is given by which of the following equations?
A) EX = ( × P)/ B) = (EX × P)/ C) EX = ( × )/P D) = (EX × )/P
An economy that is operating below its full-employment capacity is experiencing a(n):
a. tax-induced recession. b. recessionary gap. c. fiscal drag. d. market correction. e. inflationary gap.
Assume that workers have perfect information about changes in inflation. Which of the following statements is true in this context?
a. Wage rates will not adjust immediately to the price level on account of the fixed contracts. b. The aggregate supply curve of the economy will become perfectly elastic. c. The aggregate supply curve will shift to the right. d. Nominal wage rates will always exceed the real wage rate. e. The economy will continue to produce at the potential level of real GDP.
Although financial crises can be unpredictable, they are usually preceded by identifiable vulnerabilities
Indicate whether the statement is true or false