Since a monopolistic competitor produces a product with many close substitutes, but none exactly like it. As a result, the firm:
a. has no market power.
b. faces a highly inelastic demand curve.
c. has unlimited market power.
d. has some degree of market power.
Ans: d. has some degree of market power.
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Using real GDP on the horizontal axis instead of real disposable income implies that a marginal propensity to consume 0.75 generates for every additional $100 of real GDP
A) $25 of additional saving. B) $56.25 of additional consumption spending. C) $25 of additional saving and taxes. D) $75 of additional real disposable income.
Suppose the Federal Reserve buys $50 million worth of securities from a commercial bank. As a result, the monetary base ________, and the quantity of money will ________ $50 million due to the ________
A) increases; increase by more than; money multiplier B) decreases; decrease by more than; money multiplier C) increases; increase by more than; expenditure multiplier D) decreases; decrease by less than; expenditure multiplier E) increases; decrease by; currency drain
In the Keynesian model, a short-run increase in investment spending will shift the aggregate
A) supply curve to the left. B) supply curve to the right. C) demand curve to the left. D) demand curve to the right.
The value of a loan of $50,000 after a year at 2 percent interest is:
A. $1,000. B. $52,000. C. $49,000. D. None of these is true.