The model of perfect competition and the model of monopolistic competition differ in that
A) perfect competition assumes many buyers and sellers while monopolistic competition assumes many buyers but few sellers.
B) perfect competition assumes easy entry of new firms while there are more significant barriers to entry in monopolistic competition.
C) perfect competition assumes firms make zero profits in the long run and monopolistic competition assumes firms make positive profits.
D) perfect competition assumes the product is homogeneous and monopolistic competition assumes the product is differentiated.
Answer: D
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If velocity does not change and if real GDP and the quantity of money grow at the same rate, then the price level
A) does not change and the inflation rate is zero. B) falls and the inflation rate is negative. C) rises and the inflation rate is negative. D) falls and the inflation rate is positive. E) rises and the inflation rate is positive.
Refer to Table 2.3. Nominal GDP in 2013 is
A) $568.00. B) $794.00. C) $812.00. D) $961.00.
A change in government spending has a larger effect on income the
a. larger the elasticity of money demand. b. smaller the elasticity of money demand. c. steeper the LM curve. d. flatter the LM curve.
In the simple circular flow model:
A. businesses are sellers of resources and demanders of products. B. businesses are sellers of both resources and products. C. households are sellers of resources and demanders of products. D. households are sellers of products and demanders of resources.