Which of the following statements about the elasticity of demand for a monopolist is TRUE?
A) Since a monopolist produces a good with no close substitutes, the price elasticity of demand for the good is zero.
B) A monopolist produces a good with demand that is perfectly inelastic because people can not do without the good.
C) Since every good has some substitute, even if imperfect, the demand for a good produced by a monopolist will not have zero price elasticity.
D) Since the demand curve of a monopolist is downward sloping, the demand for the good must be inelastic.
C
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The new Keynesians believe that the economy is not always in equilibrium because:
a. of the existence of voluntary unemployment. b. the Federal Reserve policy is too restrictive. c. government intervention destabilizes the economy. d. of the existence of wage and price rigidities. e. the rate of inflation is too high.
For both Keynesians and monetarists to predict accurately the effects of a change in the money supply on the price level, they need to add ____ to their analysis
a. aggregate demand b. nominal GDP c. real GDP d. aggregate supply e. government spending