The public interest theory of industrial regulation contends that:
A. while industrial regulation is sound in theory, bureaucrats allow monopolists to obtain
excessive profits.
B. regulated monopolies are tantamount to legal cartels.
C. the objective of regulation is to protect the public from the market power inherent in natural
monopolies.
D. firms in some industries want to be regulated.
Answer: C
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Mutual funds that attempt to mimic the performance of a broad market index, such as the Dow Jones Industrial Average, are known as:
a. socially responsible funds. b. index funds. c. equity funds. d. fixed-income funds. e. money market funds.
If the MPC is .80, then a change in disposable income of $60 billion will lead to an initial change in consumption of
a. $30 billion. b. $42 billion. c. $48 billion. d. $60 billion. e. $70 billion.
Ceteris paribus, with a fixed exchange rate, if Americans decide to buy more Japanese-made television sets, this causes a market ________ of Japanese currency and creates a balance-of-payments ________ for the United States.
A. shortage; deficit B. surplus; surplus C. surplus; deficit D. shortage; surplus
In which of the following models of firm behavior do firms make strategic pricing decisions and also charge a perfectly competitive price?
A. Contestable market model of oligopoly B. Monopoly model C. Perfectly competitive model D. Cartel model of oligopoly