When new firms are encouraged to enter a monopolistically competitive market
A) some existing firms must be earning economic profits.
B) the demand curve facing an existing firm shifts to the right.
C) they do so because there is insufficient product differentiation.
D) the marginal cost curve facing an existing firm shifts downwards.
A
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Suppose that the government increases a tax paid by employers for hiring workers (for example, Social Security). What are the likely effects on real wages, output and employment? What are the likely magnitudes of these effects?
What will be an ideal response?
From the new classical perspective, the disinflation in the early 1980s resulted in a significant recession because
a. the policy change to disinflation was unanticipated. b. the policy was not credible. c. inflationary expectations were backward looking. d. None of the above e. both a and b.
Assume the marginal propensity to consume (MPC) is 0.75 and the government cuts taxes by $250 billion. The aggregate demand curve will shift to the:
a. right by $1,000 billion. b. right by $750 billion. c. left by $1,000 billion. d. left by $750 billion.
Which of the following is not a Central Bank:
(a) The European Central Bank. (b) Bank of England. (c) Bank of America. (d) Federal Reserve.