If purchasing-power parity holds, then the value of the
a. real exchange rate is equal to one.
b. nominal exchange rate is equal to one.
c. real exchange rate is equal to the nominal exchange rate.
d. real exchange rate is equal to the difference in inflation rates between the two countries.
Ans: a. real exchange rate is equal to one.
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If the firm produces one more unit of output and total cost rises from $1,000 to $1,050, marginal cost is
a. $1,050. b. $1,000. c. $2,050. d. $50.
A competitive market structure differs from the monopoly, oligopoly, and monopolistic competition structures in the
A) producers' ability to set price. B) profit maximization condition. C) amount of long run profit. D) entry conditions.
According to the graph shown, if Q2 units are being produced, this monopolist:
This graph shows the cost and revenue curves faced by a monopoly.
A. is not maximizing profits.
B. is producing where marginal costs are less than marginal revenue.
C. is earning negative profits.
D. should increase production.
What are the macroeconomic policy implications of the rational expectations hypothesis? What should policy makers do and not do?