Assume a monopolistically competitive firm comes up with a new innovation that allows it to earn above-normal economic profits

Given the nature of the market in which it operates, over time those profits will be competed away as new competitors enter the market. Indicate whether the statement is true or false


TRUE

Economics

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An increase in the real interest rate ________ the quantity of loanable funds supplied and ________ the quantity of loanable funds demanded

A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases

Economics

Suppose the economy is producing at the natural rate of output. An open market purchase of bonds by the Fed will cause ________ in real GDP in the long run and ________ in inflation in the long run, everything else held constant

A) an increase; an increase B) a decrease; a decrease C) no change; an increase D) no change; a decrease

Economics

Long-run market supply curves are upward sloping if

A) firms are identical. B) the number of firms is restricted in the long run. C) input prices fall as the industry expands. D) All of the above.

Economics

Exchange rates that are allowed to fluctuate in response to changes in supply and demand is known as

A) the foreign exchange markets. B) standard drawing rights. C) fixed exchange rates. D) flexible exchange rates.

Economics