If firms have ________ and if they set prices and wages on this basis, then prices and wages will, on average, be set at market-clearing levels.
A. rational expectations
B. negative inventories
C. no competition
D. excess capacity
Answer: A
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A market situation in which there are a few large firms is called
A) monopolistic competition. B) imperfect competition. C) oligopoly. D) monopoly.
In the short run, with predetermined prices, when output is less than planned aggregate expenditure:
A. planned investment is less than actual investment. B. potential output is less than short run equilibrium output. C. planned investment is greater than actual investment. D. potential output is greater than short run equilibrium output.
If the demand curve for a product is vertical, then
A) the demand for the product is elastic. B) the demand for the product is perfectly elastic. C) only a certain amount of the product will be consumed regardless of price. D) the price elasticity of the product approaches zero.
Refer to the data. For the years shown, the growth of:
Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a five-year period are as follows. Answer the question on the basis of these data.
A. real GDP has exceeded the growth of nominal GDP.
B. nominal GDP accurately reflects changes in real output.
C. nominal GDP overstates increases in real output.
D. nominal GDP understates increases in real output.