In a perfectly competitive industry, the industry demand curve
A. must be vertical.
B. is upward sloping.
C. must be horizontal.
D. is downward sloping.
Answer: D
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Compared with a perfectly competitive firm facing the same costs, long-run equilibrium for a monopolistically competitive firm will result in
A) a higher price and greater output. B) a lower price and less output. C) a higher price and less output. D) a lower price and greater output.
Which combination of signals would be a strong indication that Fed policy is too expansionary and that a shift to a more restrictive policy is in order?
a. commodity prices are falling and the dollar is appreciating. b. commodity prices are rising and the dollar is depreciating. c. commodity prices are rising and the dollar is appreciating. d. commodity prices are falling and the dollar is depreciating.
The Coase Theorem suggests that negotiations to eliminate an externality allow the resource to
A. stop causing the externality altogether. B. move to the person who values it the most. C. move to the person who needs it the most. D. continue to benefit everyone.
In the above figure, suppose the economy is at a short-run equilibrium at point B and the interest rate is r2. Which of the following policy options for the Fed will help solve the short-run situation?
A) open market sale of government securities B) lowering the required reserve ratio C) lowering the differential between the discount rate and the federal funds rate D) open market purchase of government securities