In the example of the peg between Britain and Germany, what would have been the case if Britain had allowed the pound to float and depreciate after Germany's GDP rise?
A) Britain would have suffered depreciation and a recession.
B) Britain would have had to raise interest rates.
C) Britain would no longer be eligible to join the new euro currency.
D) Britain could have lowered interest rates and enjoyed an added boost to GDP.
Answer: D) Britain could have lowered interest rates and enjoyed an added boost to GDP.
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Which of the following statements is FALSE?
A) An unregulated, profit-maximizing monopolist will not operate in the inelastic portion of the demand curve. B) The marginal revenue earned by a monopolist will always be less than the product's price. C) Typically there are numerous very close substitutes for the product of a monopolist. D) For a profit-maximizing monopolist, marginal revenue equals marginal cost.
For a monopolist, P < MR at all quantities
a. True b. False
The demand curve for a monopolist is:
a. the demand curve for the industry. b. less than the market demand curve. c. below the marginal revenue curve. d. nonexistent. e. the sum of the demand curves of the perfectly competitive firms in the industry.
Which of the following propositions would a proponent of supply-side economics be most likely to stress?
a. Higher marginal tax rates will lead to a reduction in the budget deficit and lower interest rates, because they expand government revenues. b. Higher marginal tax rates promote economic inefficiency and thereby retard aggregate output, because they encourage investors to undertake low-productivity projects with substantial tax-shelter benefits. c. Income redistribution payments will exert little impact on real aggregate supply, since they do not consume resources directly. d. A tax reduction will increase the disposable income of households. Thus the primary impact of a tax reduction on aggregate supply will stem from the influence of the tax change on the size of the budget deficit or surplus.