Which of the following describes the longrun situation in a monopolistically competitive market?
a. Competition drives out firms until there is only one left.
b. New firms enter the market because of monopoly profits, the demand curve shifts to the left and becomes flatter, and profits disappear .
c. New firms enter the market and eventually there is only one kind of product, and each firm agrees to share the profits.
d. Consumers are left with no choices and no close substitutes, and firms make higher profits.
Answer: b. New firms enter the market because of monopoly profits, the demand curve shifts to the left and becomes flatter, and profits disappear .
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Monetarists contend that an expansionary monetary policy will lead to a rise in the interest rate because __________ and the __________ effect will raise interest rates by more than the initial __________ effect lowers it
A) inflationary expectations; income; liquidity B) inflationary expectations; liquidity; income C) deflationary expectations; income; liquidity D) deflationary expectations; liquidity; income
Activists believe that monetary and fiscal policy will only work if it comes as a surprise to the public
a. True b. False Indicate whether the statement is true or false
The market expansion effect of globalization has which of the following effects?
A. The labor force participation rate declines. B. The demand for labor for many kinds of work increases, pushing the equilibrium wage up. C. The overall number of workers employed falls. D. The supply of labor for many kinds of work increases, pushing the equilibrium wage down.
The real wage in Fantasyland has been constant since 1950. The nominal wage in 2015 was $100, and the Consumer Price Index (CPI) was 200 in 2015. What was the nominal wage in 2002 if the CPI was 50 in 2002?
A) Nominal wage = $25 B) Nominal wage = $400 C) Nominal wage = $100 D) Nominal wage = $250