Which of the following is NOT a characteristic of monopolistic competition?
A) product differentiation
B) a large number of entry barriers
C) advertising
D) a significant number of sellers
Answer: B
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A system of deposit insurance
A) attracts risk-taking entrepreneurs into the banking industry. B) encourages bank managers to decrease risk. C) increases the incentives of depositors to monitor the riskiness of their bank's asset portfolio. D) increases the likelihood of bank runs.
The substitution effect that occurs when interest rates change involves a change in consumption that develops from ________
A) a change in the general level of prices B) a period of increasing productivity C) a change in the level of income D) a change in the relative prices of consumption in the two periods
Which of the following statements is TRUE for the U.S. economy?
A) Supply of services always reflects all social costs. B) Demand for services always reflects all social costs. C) Private costs are not always equal to social costs. D) Social benefits are always emphasized in advertising.
The modern view of the Phillips curve suggests that:
a. when inflation is reduced, unemployment will fall below the natural rate. b. the Phillips curve is an unstable relationship. c. systematic demand stimulus policies will be unable to affect prices in the long run. d. there will be a trade-off between inflation and unemployment in the long run.