Monopolistic competition is characterized by firms
A. producing differentiated products.
B. producing where price equals marginal cost.
C. making economic profits in the long run.
D. producing at optimal productive efficiency.
Answer: A
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In the long run, a perfectly competitive firm will
A) be able to make an economic profit. B) produce but incur an economic loss. C) make zero economic profit. D) not produce and will incur an economic loss equal to its total fixed cost. E) not produce but not incur an economic loss.
In the IS-LM model, if interest rates fall while output falls the
a. money supply must have fallen. b. price level must have fallen. c. money supply must have risen. d. level of government spending must have risen. e. none of the above.
The Federal Reserve System:
a. was created by and is owned by the government. b. pursues independent fiscal policy at the behest of Congress. c. never acts to control inflation. d. pursues an independent monetary policy which can conflict with the government's economic policy. e. only acts to lower taxes and increase spending when there are recessionary tendencies in the economy.
In command-and-control regulation, _____
a. a one-size-fits-all regulation achieves an efficient outcome that maximizes net social welfare b. policies are flexible in nature c. policies provide incentives to figure out ways to reduce externalities d. policies are intended to alleviate the social costs of externalities