Use the information in the above table. The external marginal costs are
A. decreasing.
B. inverse to quantity produced.
C. constant.
D. increasing.
Answer: D
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In a perfectly competitive market, a permanent increase in demand initially brings a higher price, economic
A) loss, and entry into the market. B) loss, and exit from the market. C) profit, and entry into the market. D) profit, and exit from the market.
In the long run, firms in monopolistic competition have excess capacity
Indicate whether the statement is true or false
Refer to Figure 28-1. Suppose that the economy is currently at point A, and the unemployment rate at A is the natural rate. What policy would the Federal Reserve pursue if it wanted the economy to move to point C in the long run?
A) Sell treasury bills. B) Increase the money supply. C) Lower the discount rate. D) Buy treasury bills. E) No policy will move the economy to point C in the long run.
In Keynes' concept of the liquidity trap,
A) monetary policy becomes more effective as interest rates fall below normal. B) people wish to hold more bonds as interest rates fall below normal. C) people wish to hold fewer bonds as interest rates fall below normal. D) there is a need for more liquidity in the banking system.