The reason economists consider monopoly to be socially undesirable is that monopolists:
A. can charge any price they want.
B. produce less than the socially optimal level of output.
C. earn too much economic profit.
D. exploit the inelastic nature of demand.
Answer: B
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Suppose that you took out a $1000 loan in January and had to pay $75 in annual interest. During the year, inflation was 6 percent. Which of the following statements is CORRECT?
A) The nominal interest rate is 7.5 percent and the real interest rate is 1.5 percent. B) The nominal interest rate is 7.5 percent and the real interest rate is 13.5 percent. C) The real interest rate is 7.5 percent and the nominal interest rate is 1.5 percent. D) The real interest rate is 6 percent and the nominal interest rate is 7.5 percent.
During the mid to late 1990s, the incentives for investment spending were provided by rising
a. aggregate demand. b. real interest rates. c. levels of corporate taxes. d. levels of capital gains taxes.
Refer to the above table. What is the marginal utility for the 10th unit for Hillary and for Bill?
A. Hillary: 10; Bill 10 B. Hillary: 220; Bill 450 C. Hillary: -10; Bill: 10 D. Hillary: 0; Bill: 0