A monopolistically competitive industry is like a purely competitive industry in that:
A. nonprice competition is a feature in both industries.
B. firms in both industries face a horizontal demand curve.
C. each industry produces a standardized product.
D. neither industry has significant barriers to entry.
Answer: D
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If the nominal interest rate increases without any change in the rate of inflation:
A) the ratio of real interest rate to nominal interest rate increases. B) the real interest rate increases. C) the real interest rate decreases. D) the real interest rate remains the same.
According to some New Keynesian theories, one possible rationale for active policy making is
A) growing competition in U.S. product markets. B) flexible prices. C) sluggish adjustment of the price level in response to changes in aggregate demand D) people are not rational and so do not react to incentives.
Long-run equilibrium under monopolistic competition is similar to long-run equilibrium under perfect competition in that:
a. price equals the minimum average total cost. b. firms face perfectly elastic demand curves. c. price equals average cost d. marginal revenue equals average cost.
We benefit from trade if we are able to obtain a good from a foreign country by giving up more of other goods than we would have to give up to obtain the good at home
a. True b. False Indicate whether the statement is true or false