Answer the following statement true (T) or false (F)
1) The larger the number of firms and the less the degree of product differentiation, the greater
will be the elasticity of a monopolistically competitive seller's demand curve.
2) The economic profits earned by monopolistically competitive sellers are zero in the long run.
3) The excess capacity problem associated with monopolistic competition implies that fewer firms
could produce the same industry output at a lower total cost.
4) The demand curve of a monopolistically competitive firm is more elastic than that of a pure
monopolist.
1) T
2) T
3) T
4) T
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When disposable income increases from $9 trillion to $10 trillion, consumption expenditure increases from $6 trillion to $6.8 trillion. The MPC is
A) 0.60. B) $6.8 trillion. C) 0.68. D) 1.00. E) 0.80.
The National Monetary Commission
A) was created by Congress to study the setting up of a central bank. B) authorizes open market operations. C) oversees nationally chartered banks. D) chooses Federal Reserve district bank presidents.