In monopolistic competition, the entry of new firms
A) shifts existing firms' demand curves rightward.
B) shifts existing firms' demand curves leftward.
C) only results in a movement along the existing firms' demand curves.
D) has no effect on the existing firms' demand curves.
E) shifts existing firms' supply curves rightward.
B
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In the figure above, to use fiscal policy to move the economy back to potential GDP, the government must increase government expenditure by ________ $1 trillion and/or decrease taxes by ________ $1 trillion
A) more than; more than B) less than; less than C) less than; more than D) exactly; exactly E) more than; less than The figure above shows an economy aggregate demand curve and aggregate supply curves.
Inferior goods are those for which demand increases as
A) the price of a substitute falls. B) the price of a substitute rises. C) income decreases. D) income increases.
Which of the following is true about the Federal Reserve and its ability to prevent recessions? The Federal Reserve
A) can fine tune the economy and realistically hope to keep the economy from experiencing recessions. B) cannot realistically fine tune the economy and has little to no effect on the magnitude and length of recessions. C) cannot realistically fine tune the economy, but seeks to keep recessions shorter and milder than they would otherwise be. D) does not try to eliminate recessions, but instead focuses on preventing inflation.
The FE line
A) is horizontal. B) is vertical. C) slopes downward. D) slopes upward.