If all firms in a perfectly competitive industry are earning a normal profit, then:
A. existing firms will exit the industry.
B. new firms will enter the industry.
C. there is no incentive for firms to enter or exit the industry.
D. the market supply curve will shift to the left.
Answer: C
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Traditionally, the Fed often communicated its intentions to restrict or expand monetary policy by announcing a change in its target for the ________.
A. consumer price index B. discount rate C. prime rate D. federal funds rate
Which of the following is TRUE about current cost method and market value method?
A) They are used by the BEA to place current values on foreign indirect investments. B) These methods lead to the same valuations. C) Based on the current cost method, the BEA's 2009 estimate of U.S. net foreign wealth was $2,737.86 billion. D) The current cost method is preferred by the BEA. E) Foreign direct investments of the U.S. are valued at their original purchase price.
In the long run in a monopolistically competitive market, a firm will, in theory,
A) earn economic profits. B) suffer losses. C) break even. D) earn zero accounting profits.
Because people may change how they react when economic policies are changed, comparing macroeconomic models is
A. not attempted by legitimate economists. B. difficult. C. only effective for long-run analysis. D. impossible.