Which of the following is an example of a change in culture affecting the production of a good or service:
A. A shortage of chocolate chips causes a cookie company to stop production.
B. Laws banning smoking in restaurants result in a decrease in demand for cigarettes.
C. An oil spill in the ocean causes local seafood restaurants to lose business.
D. The "green movement" leads to an increase in demand for recycled products.
D. The "green movement" leads to an increase in demand for recycled products.
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Major macroeconomic questions include all of the following EXCEPT:
A. Can inflation be reduced without generating additional unemployment? B. Are free trade agreements beneficial? C. How do monopoly firms set prices and determine quantities to produce? D. What causes slowdowns in productivity growth?
If the prices for the same goods and services are different in two nations, the exchange rate adjusts over the long run to achieve
A) zero net exports for each nation. B) purchasing power parity between the two currencies. C) balance of payments account between the two nations equal to zero. D) a zero current account balance between the two nations. E) interest rate parity.
In the base year, the GDP deflator is always
a. -1. b. 0. c. 1. d. 100.
Smyth Industries operated as a monopolist for the past several years, earning annual profits amounting to $50 million, which it could have maintained if Jones Incorporated did not enter the market. The result of this increased competition is lower prices and lower profits; Smyth Industries now earns $10 million annually. The managers of Smyth Industries are trying to devise a plan to drive Jones Incorporated out of the market so Smyth can regain its monopoly position (and profit). One of Smyth's managers suggests pricing its product 50 percent below marginal cost for exactly one year. The estimated impact of such a move is a loss of $1 billion. Ignoring antitrust concerns, compute the present value of Smyth Industries' profits, if it could have remained a monopoly when the interest rate
was 5 percent. A. $200 million B. $100 million C. $1.05 billion D. $210 million