If all firms in a perfectly competitive industry are earning a normal profit, then:
A. existing firms will exit the industry.
B. new firms will enter the industry.
C. there is no incentive for firms to enter or exit the industry.
D. the market supply curve will shift to the left.
Answer: C
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The value at which one currency can be exchanged for another currency is called the real exchange rate
Indicate whether the statement is true or false
When resource prices are negotiable, the long-run aggregate supply curve is represented by: a. an upward-sloping line b. a downward-sloping line c. a vertical line at potential output
d. a horizontal line at the actual price level. e. a horizontal line at the expected price level.
If your disposable personal income increases from $30,000 to $40,000 and your savings increases from $2,000 to $4,000 . your marginal propensity to save (MPS) is:
a. 0.2. b. 0.4. c. 0.5. d. 0.8. e. 1.0.
If aggregate planned expenditures equal real GDP, then
A) unplanned inventory changes equal zero. B) inventories decrease below their planned levels and businesses increase their production. C) inventories decrease below their planned levels and businesses decrease their production. D) inventories increase above their planned levels and businesses decrease their production. E) there is no equilibrium level of real GDP.