Most of our daily economic activity takes place in which type of market?
A. monopoly
B. oligopoly
C. imperfect competition
D. perfect competition
E. public good
Ans: C. imperfect competition
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Suppose the value of the CPI is 1.100 in year one, 1.160 in year two, and 1.270 in year three. Assume also that the price of computers increases by 3% between year one and year two, and by another 3% between year two and year three. The price level is increasing, the inflation rate is ________, and the relative price of computers is ________.
A. increasing; decreasing B. constant; increasing C. increasing; increasing D. constant; decreasing
Assume that the demand curve for sunblock is linear and downward sloping. Which of the following statements about the slope of the demand curve for sunblock and the price elasticity of demand for sunblock are true?
A) The slope is constant, but the price elasticity of demand is not constant at all points along the demand curve for sunblock. B) The slope of the demand curve for sunblock is constant and equal to zero; demand is perfectly inelastic. C) The slope is not constant, but the price elasticity of demand is constant at all points along the demand curve for sunblock. D) The slope and the price elasticity of demand are constant at all points along the demand curve for sunblock.
To increase the money supply, the Fed might: a. increase the reserve requirement and the discount rate
b. decrease the reserve requirement and the discount rate. c. increase the reserve requirement and decrease the discount rate. d. sell government securities and increase the discount rate. e. sell bonds on the open market and increase the reserve requirement.
Economists are concerned that a large cost to nations entering into a monetary union is:
A) the inability to collect taxes. B) the inability to rescue banks or stimulate the economy via a lender-of-last-resort mechanism. C) the tendency toward ever higher deficits. D) sticky prices.