To eliminate built-in inflation from the economy, the Fed must
a. announce its intention to have a single policy objective
b. create a recession
c. maintain a constant rate of inflation
d. resist the temptation to change its interest rate targets
e. work closely with Congress and the President
B
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Division of customers by territory or customer type is illegal
Indicate whether the statement is true or false
Assume that a perfectly competitive constant-cost industry is in long-run equilibrium when market demand suddenly decreases. Which of the following statements is incorrect?
a. Existing firms will start to suffer short-run losses b. Existing firms will shut down in the short run if average variable cost exceeds average revenue at all output levels c. Some firms will leave the industry in the long run d. The market supply curve will shift to the right in the long run e. Any short-run losses will be eliminated in the long run
Who will lose more customers by raising their price, a firm operating in a perfectly competitive market or a monopolistic competitor? Explain
Monopolistic competition is like perfect competition in that they both experience?
a. downward sloping demand curves b. product differentiation c. easy entry and exit from the market thus eliminating long-run profits d. barriers to production to keep other market participants out in the long run