Double markup problems arise when
a. upstream firms have no market power
b. downstream firms have market power
c. upstream and downstream products are unrelated in demand
d. upstream and downstream firm's pricing decisions tend to increase the demand for the other product
b
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Explain the Keynesian theory of money demand. What motives did Keynes think determined money demand? What are the two reasons why Keynes thought velocity could NOT be treated as a constant?
What will be an ideal response?
Assume that a profit maximizing monopolist is producing a quantity such that marginal revenue exceeds marginal cost. We can conclude that the
A) firm is maximizing profit. B) firm's output is smaller than the profit maximizing quantity. C) firm's output is larger than the profit maximizing quantity. D) firm's output does not maximize profit, but we cannot conclude whether the output is too large or too small.
The most responsive to interest rate changes is the _______ demand for money.
A. transactions B. precautionary C. speculative
Taxes and transfer payments automatically reduce fluctuations in real GDP and thereby stabilize the economy without any need for decisions from Congress or the White House.
Answer the following statement true (T) or false (F)