What type of market runs most efficiently when one large firm supplies all of the output?
a. a natural monopoly
b. a network
c. perfect competition
d. imperfect competition
Ans: a. a natural monopoly
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Suppose that one can read a graph that shows information about price and quantity of some product. Relying solely on the graph, is it possible to explain the relationship between the two variables?
What will be an ideal response?
A $1.5 trillion increase in investment leads equilibrium expenditure to increase from $7.0 trillion to $10.5 trillion. In this case, the expenditure multiplier is
A) 7.00. B) 4.67. C) 2.33. D) 1.50. E) 10.5.
Assume that the government has a target value, X, for the current account surplus
(a) What is the goal of external balance? (b) Assume that we are dealing with only the short run, what are the values of P and P?? (c) Given fixed P and P , what would happen if E rises? (d) Given P and P , what would happen if T decreases, i.e., an expansionary fiscal policy? (e) Given P and P , what would happen if G increases, i.e., an expansionary fiscal policy? (f) Given all of the above, what is the relation between the exchange rate, E, and fiscal ease, i.e., an increase in G or a reduction in T? (g) Assume that the economy is in external balance. What will happen if the government maintains its current account at X, but devaluates the domestic currency? (h) Assume that the economy is at external balance. What will happen if the government raises E? (i) Assume that the economy is at external balance. What will happen if the government lowers E?
Property rights includes 3 elements:
What will be an ideal response?