Refer to the graph shown. Holding cost conditions constant, if the monopolistically competitive firm represented were suddenly to find itself in a perfectly competitive market, the long-run equilibrium price would adjust to:
A. $6.
B. $8.
C. $4.
D. $7.
Answer: A
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According to the quantity theory of money, inflation is caused by
A) the money supply growing faster than real GDP. B) GDP growing at the same rate as the money supply. C) the money supply growing slower than real GDP. D) GDP growing faster than the money supply.
When a transfer price is set lower
a. the buying division will chose to purchase less from the selling division b. the buying division will chose to purchase more from the selling division c. the selling division will chose to purchase less from the buying division d. the selling division will chose to purchase more from the buying division
Which of the following is an example of an automatic stabilizer?
A. The reduction in the money supply that occurs as banks become less willing to make loans during a recession B. The reduction in real wages that occurs as the economy goes into a recession C. The increase in government spending that occurs as the result of new spending bills passed by Congress D. The rise in tax revenue that occurs as a result of growth in real GDP
When Paul Volcker became Federal Reserve chairman in 1979
A. the rate of inflation was relatively low, and he managed to raise it to 12 percent. B. the rate of inflation was 12 percent, and he managed to reduce it, but doing so caused a recession. C. the rate of inflation was 12 percent, and he was not able to bring it down during his time as chairman. D. the rate of inflation was already low and stable, but his policies made it lower and more stable.