Monopolistic competition may lead to each of the following except
A. inefficiency.
B. over-differentiation.
C. long-run break-even.
D. monopoly profits.
D. monopoly profits.
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Holding constant risk and the real returns available abroad, lower domestic real interest rates ________ capital inflows, ________ capital outflows, and ________ net capital inflows.
A. decrease; increase; decrease B. increase; increase; decrease C. increase; decrease; increase D. increase; increase; increase
Asymmetric information exists when
A) both parties to an exchange have all relevant facts about that exchange. B) a good that is either nonrivalrous or nonexcludable is being sold on a market. C) the two parties to an exchange differ in what they know about the good being exchanged. D) neither party to an exchange is knowledgeable about the quality of the good being exchanged.
If the government wants to encourage the consumption of a particular good, they should enact:
A. a subsidy to buyers, since they deserve the benefit more than the producers. B. a subsidy on either buyers or sellers, since they will both have the same effect on the market. C. a subsidy to buyers, since they want to affect consumption of the good. D. a subsidy to sellers, since they want more to be produced and offered for sale.
Because handling charges are relatively fixed, the interest rate on a loan generally
A. is unrelated to the size of the loan. B. decreases with the size of the loan. C. is constant regardless of the size of the loan. D. increases with the size of the loan.