If I is gross investment, K is capital stock, and "d" is the ratio of replacement investment to the capital stock, then Tobin's q is
A) q = I/K - d.
B) I = Kq + d.
C) I/K = j (q - 1 ) = d
D) q = I/K (j - 1 ) - d.
C
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An indirect effect of monetary policy is that as the money supply
A) increases, interest rates fall, and borrowing and spending increase. B) increases, interest rates rise, and borrowing and spending decrease. C) decreases, interest rates rise, and borrowing and spending increase. D) decreases, interest rates fall, and borrowing and spending increase.
A market is classified as monopolistically competitive when
A) there is a barrier that blocks entry by other firms. B) a small number of firms compete. C) many firms produce the same product. D) many firms produce a slightly differentiated product. E) there is one firm that sells a good or service with no close substitutes.