Assume that an industry is currently a monopoly. If the government breaks this monopoly up into a large number of small, perfectly competitive firms, which of the following will occur?
A. Both price and industry output will increase.
B. Price will fall and industry output will increase.
C. Price will increase and industry output will decrease.
D. Both price and industry output will decrease.
B. Price will fall and industry output will increase.
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Suppose you have $400 and the inflation rate is 5 percent. In order to earn a real return of $16 on your investment, the nominal interest rate needs to be near
A) 0 percent. B) 4 percent. C) 6 percent. D) 9 percent.
Forward contracts are often illiquid because
A) any capital gains on them are heavily taxed, making investors reluctant to sell them. B) government regulation has not provided for a secondary market in them. C) they generally contain terms specific to the particular buyer and seller. D) the brokerage fees involved in buying and selling them are very high.
What is the difference between the present value of $550 to be received after 3 years and after 5 years from now at an annual interest of 15 percent?
a. $73.49 b. $61.60 c. $250.02 d. $88.11
In a flexible exchange rate regime, a reduction in the expected future exchange rate will cause
A) the IP curve to shift to the left/up. B) the IP curve to shift to the right/down. C) a movement along the IP curve. D) neither a shift nor movement along the IP curve.