In the short run, a monopolistically competitive firm can earn
A) positive profits only.
B) zero profits only.
C) zero or positive profits only.
D) zero, positive or negative profits.
Ques. 2How does the original, simplified Keynesian model compare with modern Keynesian analysis?
A) The original Keynesian model assumed price flexibility whereas the modern analysis does not.
B) In both cases, the short-run aggregate supply curve (SRAS) is horizontal.
C) Modern analysis shows an upward sloping SRAS to reflect some price flexibility. The original Keynesian model's SRAS is horizontal and assumes sticky prices.
D) all of the above
Ques. 3Distinguish between a horizontal merger and a vertical merger.
What will be an ideal response?
Ques. 4Deflation is defined as a situation in which
A) the rate of inflation is below 2 percent.
B) the average of all prices of goods and services in an economy is falling.
C) the value of the dollar is rising relative to other currencies.
D) the Gross Domestic Product's growth rate is less for a given quarter than it was for the prior quarter.
Ques. 5New growth theory is concerned with
A) finding a good way to measure economic growth.
B) increasing the savings rate in the U.S.
C) understanding the forces that increase productivity.
D) understanding how compounding works.
Ques. 6The textbook points out that rent controls have
A) benefited upper-income or existing tenants.
B) had no effect on the market for housing.
C) greatly benefited the homeless.
D) attracted increases in low-income housing.
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