Which of the following statements is TRUE about the relationship between a firm's demand curve under perfect competition and monopoly?
A) Under perfect competition, the demand curve is perfectly elastic; under monopoly, the demand curve has elastic, unit-elastic and inelastic portions.
B) Under monopoly, the demand curve is perfectly elastic; under perfect competition, the demand curve has elastic, unit-elastic and inelastic portions.
C) The demand curves for a monopoly and perfect competition are always inelastic.
D) We can define a demand curve under perfect competition but not under monopoly.
Answer: A
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One of the factors that contributed to the success German policymakers had using a monetary targeting type policy starting in the mid-1970s and continuing through the next two decades was that
A) they used a rigid target for the money growth rate. B) they implemented policy so their inflation rate goal was met in the short run. C) the money target was flexible to allow the Bundesbank to concentrate on other goals as needed. D) they rarely communicated the intentions of policy to the public in order to keep the public from panicking.
The behavior of regulators when trying to win approval for their actions from their entire constituency is best described by the
A) capture hypothesis. B) law of increasing social well-being. C) share-the-gains, share-the-pains hypothesis. D) marginal benefit pricing hypothesis.
Although monopoly has lower output than competition, the level of output is efficient.
Answer the following statement true (T) or false (F)
By decreasing the required reserve ratio, the Federal Reserve will
A. increase the money supply unless accompanied by a decrease in the discount rate. B. increase the money supply unless banks hold on to excess reserves instead of lending them. C. decrease the money supply by the amount of the initial change caused by the decreased required reserve ratio. D. decrease the money supply by a multiple of the initial change caused by the decreased required reserve ratio.