According to institutionally-focused economists:
A. there is no relationship between PQ and MV because Q isn't constant.
B. there is no relationship between PQ and MV because V is constant.
C. the direction of causation goes from PQ to MV.
D. the direction of causation goes from MV to PQ.
Answer: C
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The primary reason why monopolistically competitive firms cannot earn an economic profit in the long run is because
A) there are barriers to entry. B) there is freedom of entry. C) the antitrust laws prevent profit from increasing. D) recessions occur. E) they collude to earn a normal profit.
For a country with flexible exchange rates, if a nation's interest rate rose, what effect would this have on its current account balance?
a. No effect because interest has no effect on the current account. b. Increase it because foreign capital flows would be attracted to the nation thereby building economic strength. c. Decrease it because the exchange rate will appreciate. d. Increase it because the exchange rate will depreciate. e. Decrease because the exchange rate will depreciate.