Answer the following questions true (T) or false (F)
1. If a monopolistically competitive firm breaks even, the firm is earning as much in this industry as it could in any other comparable industry.
2. A monopolistically competitive firm that earns economic profits in the short run will be able to expand its market share even if the market size remains constant.
3. A monopolistically competitive firm that earns economic profits in the short run will face a more elastic demand curve in the long run.
1. TRUE
2. FALSE
3. TRUE
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Government debt and interest payments on that debt
a. are problems if they grow faster than GDP b. are unrelated in the short run c. are unrelated in the long run, but not in the short run d. generally grow faster than government spending e. contributed to the crisis experienced by the U.S. economy in the late 1990s
Contractionary monetary policy is when ________.
A. exchange rates are increased B. the money supply is decreased C. taxes are increased D. government spending is decreased