The monopolistic competition market structure is characterized by:
A. few firms and similar products.
B. many firms and differentiated products.
C. many firms and a homogeneous product.
D. few firms and a homogeneous product.
Answer: B
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For goods on which a relatively small portion of income is expended, _____
a. income effects will be small relative to substitution effects b. income effects will be large relative to substitution effects c. income effects will be about the same as substitution effects d. there will be no income effects.
In an economy, the government wants to increase aggregate demand by $50 billion at each price level to increase real GDP and reduce unemployment. If the MPS is 0.4, then it could increase government spending by:
A. $10 billion B. $20 billion C. $31.25 billion D. $40.50 billion