The theory of monopolistic competition predicts that in long-run equilibrium a monopolistically competitive firm will:
A. produce the output level at which price equals long-run marginal cost.
B. operate at minimum long-run average cost.
C. overutilize its insufficient capacity.
D. produce the output level at which price equals long-run average cost.
Answer: D
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Economies with sustained high inflation generally have
A) very low unemployment rates. B) very low GDP growth rates. C) high rates of business investment. D) independent central banks.
When the Fed engages in quantitative easing, it alters ______________________ and when the Fed makes open market purchases it alters _______________________
A) short-term interest rates; long-term interest rates B) long-term interest rates; short-term interest rates C) the required reserve ratio; income tax rates D) income tax rates; the required reserve ratio