Refer to the above figure. Suppose this industry was perfectly competitive and then merged into one monopolistic firm. The monopoly would
A) raise price from P1 to P2.
B) reduce output from Q3 to Q1.
C) reduce output from Q2 to Q1 and raise price from P3 to P4.
D) raise price from P1 to P4.
C
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The stock market boom during the 1990s
A) boosted consumption relative to income. B) depressed the percentage of disposable income saved by households. C) may explain the behavior of household savings during that decade. D) All of the above.
The key concept in the new classical approach to the aggregate supply curve is
A) the impact of imperfect information on business decisions. B) the impact of changes in the price level on real balances. C) the inverse relationship between the real interest rate and desired investment spending. D) the crowding out of investment spending by government spending.