Which of the following conditions distinguishes monopolistic competition from perfect competition?

If the MRP of labor decreases, labor:

a. demand will decrease. b. demand will increase. c. supply will increase. d. supply will decrease. e. demand and supply will be unaffected.

Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model?

a. The real risk-free interest rate falls, and reserve-related (central bank) transactions remain the same. b. The real risk-free interest rate rises, and reserve-related (central bank) transactions remain the same. c. There is not enough information to determine what happens to these two macroeconomic variables. d. The real risk-free interest rate falls, and reserve-related (central bank) transactions become more negative (or less positive). e. The real risk-free interest rate falls, and reserve-related (central bank) transactions become more positive (or less negative).