Ceteris Paribus, if current output has fallen below potential ________
A) a positive inflation gap will ensue
B) it is likely that the equilibrium real rate has fallen below the policy rate
C) a negative unemployment gap will ensue
D) it is likely that the equilibrium real rate has risen above the policy rate
E) none of the above
B
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The absence of barriers to entry in monopolistic competition means that in the long run, firms
A) earn an economic profit. B) earn zero economic profit. C) incur an economic loss. D) earn either an economic profit or zero economic profit. E) earn either zero economic profit or suffer an economic profit.
A substantial appreciation of the U.S. dollar will likely result in, all else equal,
A) lower demand for U.S. products and layoffs of U.S. workers. B) increased demand for U.S. products and increased employment of U.S. workers. C) lower foreign currency prices of U.S. products in foreign countries. D) higher U.S. dollar prices of foreign products in the United States.