Which of the barriers to entry can last indefinitely and which are more likely to eventually erode such that a new entry can take place?
What will be an ideal response?
Barriers such as economies of scale and government restrictions can last indefinitely since the first depends on technology and the latter on government action. It is unlikely that a firm can maintain control of a key input indefinitely, and patents expire after 20 years. Government regulations and tariffs can last indefinitely, although a change of government could knock these down as well.
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Which of the following is a way to obtain endogenous growth:
A) inflation. B) human capital accumulation. C) physical capital accumulation. D) population growth.
A central bank pledges to reduce the inflation rate from 20% to 5%. People reduce their inflation expectations to 10%, but the central bank only reduces inflation to 15%. What happens to the unemployment rate?
If you wanted to compare the quantity of output of a country across time periods, which of the following would you use?
What will be an ideal response?
Due to the distortionary effects of inflation, capital investment may be reduced due to higher price levels.
Answer the following statement true (T) or false (F)