An increase in expected inflation causes the real interest rate to ________ and output to ________ in the short run, before prices adjust to restore equilibrium
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
C
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One of the reasons that import substitution is popular is that
a. there was never any demand for the products in question b. infant industries would have to compete against global rivals c. it benefits suppliers to the favored domestic industries d. it slows down the progression through the production chain e. the emphasis is on comparative advantage and trade expansion
Accounting profit is usually smaller than economic profit
a. True b. False Indicate whether the statement is true or false
A competitive market economy with low barriers to entry affords an entrepreneur with
a. an environment that shields each currently successful producer from changing market conditions. b. the opportunity to bring new and different products and services to the market. c. little opportunity for wealth creation. d. a static business environment.
A price-taking firm and a monopolist are alike in that ______.
a. price equals marginal revenue for both b. both maximize profits by choosing an output where marginal revenue equals marginal cost, provided that price exceeds average variable cost c. price exceeds marginal cost at the profit-maximizing level of output for both d. in the long run, both earn zero economic profits