Which of the following is inconsistent with the model of perfect competition?
a. ease of entry into an industry
b. ease of exit from an industry
c. many buyers and sellers in the industry
d. advertising of product differences in the industry
e. a horizontal demand curve facing each firm in the industry
D
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Suppose you have $400 and the inflation rate is 4 percent. In order to earn a real return of $20 on your investment, the nominal interest rate must be
A) 1 percent. B) 5 percent. C) 9 percent. D) 12 percent.
According to empirical observations, the cost of restricting international trade in the U.S. is much greater than the benefits generated from restriction. In the light of the above observation, which of the following statements is true?
a. The benefits of protecting domestic jobs typically outweigh the costs. b. Consumers end up paying much more for the goods they buy in order to subsidize the relatively inefficient domestic producer. c. U.S. GDP would be over $14 billion higher with import restrictions than without restrictions. d. Protection of the U.S. textile and sugar industries means that all consumers pay a lower price for clothing and sugar. e. Protection of the domestic industries enable the producers to charge lower prices for their products.
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
Suppose that you deposit $2,000 in your bank and the required reserve ratio is 10 percent. The maximum loan your bank can made as a direct result of your deposit is
A) $200. B) $1,800. C) $2,000. D) $20,000.