In which of the following ways is a monopolistically competitive firm like a perfectly competitive firm?
A. Short-run economic profits are always positive.
B. Long-run economic profits are negative.
C. Long-run economic profits are positive.
D. Long-run economic profits are equal to zero.
Answer: D
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Describe the empirical research on the stickiness of prices. Given some doubt on how sticky prices are, why is it nevertheless useful for the Keynesian model to assume that prices are sticky, especially when analyzing monetary policy?
What will be an ideal response?
The supply-of-money curve is almost perfectly inelastic because:
a. as interest rates rise, people will want to be supplied with more loans b. the Fed makes more money available in response to higher interest rates. c. banks generally find loans more profitable than keeping their assets as cash in their vaults or reserve deposits at the Fed, whether interest rates are 4% or 10%. d. the Fed lowers the discount rate as interest rates rise.
Rational expectation theory implies that accurately anticipated change in aggregate demand: a. will increase RGDP in the long run
b. will affect RGDP and inflation only in the long run. c. may affect RGDP but not nominal GDP. d. will tend to be offset by the actions of input suppliers as they react to their inflation expectations.
Nasdaq
a. operates under a private rule b. is run and managed by the SEC c. is an example of a public ordering d. is an example of a public good e. none of the above