A monopolistically competitive industry combines elements of both competition and monopoly. It is correct to say that the competitive element results from:
A. a relatively large number of firms and the monopolistic element from product differentiation.
B. product differentiation and the monopolistic element from high entry barriers.
C. a perfectly elastic demand curve and the monopolistic element from low entry barriers.
D. a highly inelastic demand curve and the monopolistic element from advertising and product
promotion.
Answer: A
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Monetarists say:
A. that, because P is stable, a change in M will change Q proportionately in the opposite direction. B. a change in the money supply will change aggregate demand and therefore the nominal GDP. C. a change in the money supply will change velocity, which in turn will change nominal GDP. D. a change in the money supply will change the interest rate, which will change investment spending and nominal GDP.
Although rarely used, which of the following is an instrument the Fed has to conduct monetary policy?
A. The tax on unearned income B. The discount rate C. The corporate income tax D. The interest rate on Treasury bonds