The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment.
B. exogenous spending.
C. recessionary gaps.
D. expansionary gaps.
Answer: D
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An increase in the cost of an input will result in
A) a leftward shift in the firm's supply curve. B) an upward shift of the firm's marginal cost curve. C) a leftward shift of the market supply curve. D) All of the above.
Using Figure 2 below, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE3 might be:
A. wealth level increases.
B. interest rates increase.
C. taxes increase.
D. domestic income increases.
As new firms enter a monopolistically competitive market, profits of existing firms
a. rise, and product diversity in the market increases. b. rise, and product diversity in the market decreases. c. decline, and product diversity in the market increases. d. decline, and product diversity in the market decreases.
The demand curve a monopoly faces is
A. horizontal. B. upward sloping. C. vertical. D. downward sloping.