A nondiscriminating profit-maximizing monopolist:
A. will never produce in the output range where marginal revenue is positive.
B. will never produce in the output range where demand is inelastic.
C. will never produce in the output range where demand is elastic.
D. may produce where demand is either elastic or inelastic, depending on the level of
production costs.
Answer: B
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Pegging a country's exchange rate to the dollar can be advantageous in all of the following situations except
A) if investors believe the dollar to be more stable than the domestic country's currency. B) if a country wishes to conduct independent monetary policy. C) if imports are a significant fraction of the goods the country's consumers buy. D) if the country has extensive trade with the United States.
Ricardian equivalence argues that when the government
A) increases taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. B) cuts taxes and decreases its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. C) cuts taxes and raises its surplus, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. D) cuts taxes and raises its deficit, consumers anticipate that they will face lower taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. E) cuts taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving.
Which of the following statements about recessions is true?
a. An old rule of thumb defining recession is two consecutive quarters of falling nominal GDP. b. Recessions occur at regular intervals and last standard amounts of time. c. There is no ironclad rule for the declaration of recessions. d. Recessions are associated with low unemployment and high income.
In 2001, Congress and President Bush instituted tax cuts. According to the short-run Phillips curve, in the short run this change should have
a. reduced inflation and unemployment. b. raised inflation and unemployment. c. reduce inflation and raised unemployment. d. raised inflation and reduced unemployment.