A monopolistic industry has
A. a single, unique product and blocked entry.
B. a homogeneous product and easy entry.
C. either a standardized product or differentiated products.
D. many differentiated products and easy entry.
Answer: A
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Deposit insurance indirectly helped to create the savings and loan crisis in the United States because
A) depositors were not concerned with the types of investments made because they were insured, while at the same time savings and loans were aggressively investing in risky projects. B) depositors, believing that the government would not secure their deposits, were very concerned with the types of investments made at savings and loans. C) the government, without warning, eliminated deposit insurance for savings and loans, thereby causing a run on these institutions. D) depositors were not concerned with the types of investment made because savings and loans were making very conservative investments.
Long-run aggregate supply will decrease for all of the following reasons EXCEPT
A) reduced money wages. B) decreased human capital. C) decrease in the level of full employment. D) decreased capital.
If tax rates are cut, one might expect to observe an increase in the budget deficit. Supply-siders question this observation, arguing that
A. this is a price that must be paid for a more equitable tax system. B. when taxes are cut, expenditures must also be cut. C. a decrease in the tax rate may actually generate an increase in tax revenues. D. tax wedges will make up the difference.
If the world price for good A is below the domestic price for good A without trade, then consumer surplus will ________ and total economic surplus will ________ with trade.
A. increase; decrease B. decrease; increase C. decrease; decrease D. increase; increase