Monopolistic competition is an industry market structure with
A. a single firm in which the entry of new firms is blocked.
B. a small number of firms each large enough to impact the market price of its output.
C. many firms each able to differentiate their product.
D. many firms each too small to impact the market price of its output.
Answer: C
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If bonds and stocks are considered to be substitute goods, and the investors expect stock prices to drop in the near future, _____
a. the price of bonds will also decline b. the supply of bonds will increase c. the interest rate on bonds will decline d. the demand for stocks will increase e. the demand for bonds will decline
An investor who wants to diversify his portfolio will buy only bonds when both stocks and bonds are expected to yield better returns
a. True b. False Indicate whether the statement is true or false
The economy's self-correcting mechanism always tends to push the unemployment rate back toward a specific rate of unemployment called
a. the ideal rate of unemployment. b. the natural rate of unemployment. c. the full rate of unemployment. d. the mature rate of unemployment.
To achieve its target when the federal funds rate is above the target range, the Fed could:
A. increase the reserve requirement. B. sell bonds. C. buy bonds. D. increase the discount rate.