The text asserts that the allocation of resources among firms is efficient. What assumptions must hold for this to be true?
What will be an ideal response?
To be true, the following assumptions must hold. Factor markets are competitive and open, all firms pay the same prices for inputs, and all firms maximize profits.
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Which of the following occurrences would NOT shift the demand curve for U.S. dollars in the foreign exchange market?
A) an increase in the U.S. exchange rate B) an increase in the expected future U.S. exchange rate C) an increase in U.S. interest rates D) an increase in foreign interest rates
The 45-degree line in the Keynesian income-expenditure graph indicates
a. the basic size of the spending flow. b. points where total output is equal to aggregate expenditure. c. the size of the multiplier. d. the size of the marginal propensity to save.
What are the three main characteristics of monopolistic competition?
If costs increase, what happens to the aggregate supply curve?
What will be an ideal response?