A characteristic of monopolistically competitive industries is that:
A. the entry and exit of firms causes the representative firm to break even in the long run.
B. the representative firm produces at that level of output where marginal cost equals minimum average total cost.
C. the representative firm is not very responsive to changes in consumer demand.
D. there is product differentiation but only limited advertising of products by the representative firm.
Answer: A
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Esme’s government provides grants to companies to help them pursue research opportunities. It also invests heavily in its own research and development efforts. How has this most likely changed Esme’s country?
a. Labor productivity and growth have been hindered. b. The need for human capital has been reduced. c. Productivity and economic growth have been improved. d. The standard of living has declined.
An increase in taxes of a given amount will have a smaller impact on real GDP than a decrease in government purchases of equal amount because
A. tax increases reduce the incentive to spend and invest. B. some of the additional tax will come from disposable income that would have been saved. C. the decline in disposable income is less than the tax increases. D. government purchases are subject to a larger multiplier than consumption purchases.
Data for which country were first used to illustrate the relationship between unemployment and inflation (i.e., the original Phillips curve)?
A) France B) United States C) Canada D) Germany E) none of the above
The aggregate demand curve shows the relationship between the ________ and ________
A) inflation rate; quantity of real GDP demanded B) real interest rate: quantity of real GDP supplied C) nominal interest rate; quantity of real GDP demanded D) price level; quantity of real GDP demanded