The assumption of short-run price stickiness implies:
a. that we must adjust nominal quantities for changes in inflation.
b. that we must always allow for unexpected inflation.
c. that expected inflation is zero and nominal quantities are the same as real.
d. a balanced budget.
Ans: c. that expected inflation is zero and nominal quantities are the same as real.
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For Product X, the income elasticity of demand is 1.16. Which of the following is therefore definitely TRUE?
A) Product X is a necessity. B) Product X is income elastic. C) Product X is a substitute for some other good. D) Product X is something that mostly poor people will buy.
One defining characteristic of pure monopoly is that:
A. the monopolist produces a product with no close substitutes. B. the monopolist is a price taker. C. there is relatively easy entry into the industry, but exit is difficult. D. the monopolist uses advertising.