The model of perfect competition and the model of monopolistic competition differ in that
A) perfect competition assumes many buyers and sellers while monopolistic competition assumes many buyers but few sellers.
B) perfect competition assumes easy entry of new firms while there are more significant barriers to entry in monopolistic competition.
C) perfect competition assumes firms make zero profits in the long run and monopolistic competition assumes firms make positive profits.
D) perfect competition assumes the product is homogeneous and monopolistic competition assumes the product is differentiated.
D
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If oranges and grapefruit are close substitutes, an increase in the price of oranges will shift the demand curve of
A. both products to the right. B. both products to the left. C. grapefruit to the right. D. oranges to the left.
When the government's outlays exceed its tax revenues, the national debt
A) shrinks thanks to the budget surplus. B) grows to finance the budget deficit. C) grows to finance the budget surplus. D) shrinks thanks to the budget deficit. E) does not change because it has nothing to do with government outlays and tax revenue.
Because the CPI overstates inflation,
A) when wages are linked to the CPI, workers' wages become too low as time passes. B) as time passes, government payments are increasingly lower than intended. C) as time passes, government outlays are increased by more than necessary to compensate for inflation. D) workers do not receive adequate compensation for price changes. E) most contracts use the GDP deflator to measure inflation.
Which of the following equations correctly measures GDP in an economy?
A) GDP = C + I + G + NX B) GDP = C + I + G + X C) GDP = C + net I + G + NX D) GDP = C + G + I - taxes