You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants. Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown
organic produce. What is likely to happen to your business in the long run?
A) Your competitors are likely to change their menus to make their products more similar to yours.
B) Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero.
C) If your success continues, you will be likely to establish a franchise and expand your market size.
D) If you continue to maintain consistent quality, you will be able to earn profits indefinitely.
Answer: B
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Current account surpluses are offset by
A) the liquidity balances. B) capital account deficits. C) unilateral transfers. D) balance of trade surpluses.
Refer to Figure 33-4. If the economy is in long-run equilibrium, then an adverse shift in aggregate supply would move the economy from
1. A to B 2. C to D 3. B to A 4. D to C
Most people justifiably have mixed feelings about the financial markets because
A. they are controlled by government regulators. B. they provide a means for the average person to become wealthy. C. the stock market almost always falls in the long run. D. they can experience violent swings.
The short-run Phillips Curve is ________, and the long-run Phillips Curve is ________.
A. upward sloping; vertical B. downward sloping; horizontal C. downward sloping; vertical D. upward sloping; horizontal