Consumers in a monopolistically competitive market do not receive any consumer surplus because the price paid for the product exceeds the marginal cost of production

Suppose that in Mysore, the reserve—deposit ratio is

res = 0.5 - 2 i, where i is the nominal interest rate. The currency—deposit ratio is 0.2 and the monetary base equals 100. The real quantity of money demanded is given by the money demand function L(Y, i) = 0.5Y - 10i, where Y is real output. Currently, the real interest rate is 5% and the economy expects an inflation rate of 5%. The money multiplier equals A) 2.00. B) 2.40. C) 3.00. D) 4.00.

Answer the following questions true (T) or false (F)

1. Long lags associated with the legislative process in implementing fiscal policy make it more difficult to use than monetary policy. 2. The budget deficit increases during wars and recessions. 3. Increasing the federal budget deficit will contribute to increasing the federal government debt.