A government-created monopoly arises when
a. government spending in a certain industry gives rise to monopoly power.
b. the government exercises its market control by encouraging competition among sellers.
c. the government gives a firm the exclusive right to sell some good or service.
d. Both a and c are correct.
c
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Which of the following is most likely to cause a leftward shift in the demand curve for the Chinese yuan in exchange of the U.S. dollar?
A) An increase in the demand for U.S. products in China B) A decrease in the demand for Chinese products in the U.S. C) A decrease in the demand for U.S. products in China D) An increase in the demand for Chinese products in the U.S.
If a firm operates in a imperfectly competitive market, it may be able to price its products in local currencies above world prices for their goods. This is called
A) pricing to market. B) trade war. C) trade stickiness. D) price gauging.
Assume that the actual inflation rate is 3 percent, the target inflation rate is 3 percent, and that the percentage difference between actual and potential real GDP is 2 percent. According to the Taylor rule, the federal funds rate target should be
A) 3.5 percent. B) 6.5 percent. C) 5.5 percent. D) 5.0 percent.