An oligopoly firm is similar to a monopolistically competitive firm in that
A) both firms face the prisoner's dilemma.
B) both operate in a market in which there are significant entry barriers.
C) both firms have market power.
D) both firms are in industries characterized by interdependence of firms.
Answer: C
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The owner of an oil well in Texas sells 1000 barrels of oil to a refinery in Mexico for $12,000 for refining. This transaction
A.) has no effect on GDP because this is the sale of an intermediate product B.) has no effect GDP because the refinery is in Mexico C.) will increase GDP by $12,000 D.) decreases GDP because oil reserves have fallen by 1000 barrels
The rational expectations hypothesis suggests that
A) unanticipated fiscal policy actions are more powerful than monetary policy actions. B) fiscal policy actions only work when accompanied by changes in the money supply. C) anticipated monetary policy actions are more powerful than fiscal policy actions. D) anticipated fiscal and monetary policy actions are not likely to achieve their stated aims.
As more labor is hired, moving along the production function, diminishing returns occur because
A) workers are overworked and so their productivity decreases. B) the wage rate paid is too low and so workers decrease their work effort. C) there are fixed quantities of other resources. D) the real wage rate must increase in order to hire additional workers. E) real GDP increases more rapidly the more workers are hired.
Central banks may need to think about monetary policy in a way that would seek to ______________ the effects of asset price bubbles and leverage cycles on the economy.
a. moderate b. eliminate c. increase d. encourage