Monopolistically competitive firms have an incentive to:
A. create products that are exactly like the competitor's products.
B. create products that are easily substituted for the competition's products.
C. create products that have a unique feature that makes it difficult to substitute.
D. None of these statements is true.
Answer: C
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In the aggregate expenditure (AE) model, when real GDP exceeds aggregate planned expenditure, actual inventories ________ planned inventories and real GDP ________
A) are less than; decreases B) exceed; increases C) exceed; does not change D) are less than; increases E) exceed; decreases
On the island country of Sunshine where the unit of currency is fish, net exports are 50 fish, saving is 250 fish, net taxes are 100 fish, and the government budget deficit is 175 fish. The private sector has a ________
A) deficit of 125 fish B) surplus of 125 fish C) deficit of 225 fish D) surplus of 225 fish
One means of enforcing a quota is to require importers to ________.
A. obtain a license B. pay a sales tax C. obtain a sales permit D. pay an import tax
A newspaper headline reads: "Fed Cuts Federal Funds Rate for Fifth Time This Year." This headline indicates that the Federal Reserve is most likely trying to:
A. Reduce inflation in the economy B. Raise interest rates C. Ease monetary policy D. Tighten monetary policy