If the nominal interest rate is less than the rate of inflation, the real interest rate:
a. will be less than zero.
b. will be equal to the nominal interest rate.
c. will equal zero.
d. will be greater than zero.
e. will be equal to the rate of inflation.
a
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For most goods and services, income elasticity of demand tends to be smaller in the short run than in the long run. However, a recent study shows that the demand for a durable good such as automobiles tends to be more income-elastic in the short run than in the long run. Why?
What will be an ideal response?
A barrier to entry that significantly contributes to the establishment of a monopoly would be:
A. patents. B. price-taking behavior. C. diseconomies of scale. D. X-inefficiency.
Which of the following is NOT correct concerning perfectly competitive firms in the long run?
A) Long-run economic profits are zero. B) Price equals minimum long-run average cost. C) Entrepreneurs earn the opportunity cost of their investment. D) The opportunity cost of capital is zero.
An increase in autonomous consumption means that
A) the consumption function shifts down. B) the consumption function shifts up. C) the consumption function becomes steeper. D) the consumption function becomes less steep.