Verizon has a monopoly over local telephone service. If Verizon is producing where marginal revenue is greater than marginal cost, the firm
A. is maximizing profits.
B. must be earning zero profit.
C. could increase profits by increasing output.
D. could increase profits by reducing output.
Answer: C
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Why doesn't the Fed have both a money supply target and an interest rate target?
A) The Fed does not control money demand. B) Short-term interest rates do not respond to changes in the money supply, which the Fed can control. C) The Fed cannot offset the impact of changes in cash management by the public or changes in lending policies of commercial banks on the money supply. D) Only the level of interest rates matters when we consider rates of growth in real GDP, employment, and rates of price inflation.
Stock and Watson found that monetary policy was responsible for about ________% of the reduction in output volatility that occurred in the mid-1980s
A) 0 to 10 B) 10 to 20 C) 20 to 30 D) 30 to 40