Which of the following statements about a monopolistically competitive firm is FALSE?
A) It tries to differentiate its product from that of competitors.
B) It may earn short-run economic profits.
C) It produces the quantity at which MC=MR.
D) It sets price like a perfectly competitive firm.
Answer: D
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A decline in which of the following types of spending was not generally considered a part of the beginning and continuation of the Great Recession?
A) residential investment spending B) federal government spending C) consumer durables spending D) business investment spending
The long-run aggregate supply curve is vertical at $16 trillion but the short-run aggregate supply curve intersects the aggregate demand curve at $17 trillion. We know that
A) the economy is producing below full employment in the short run, and will adjust by hiring more workers, thus decreasing unemployment. B) the price level is too high. The long-run equilibrium will occur with a lower price level. C) adjustments will occur so that the long-run aggregate supply equals $17 trillion. D) adjustments will occur so that the short-run aggregate supply eventually intersects the aggregate demand curve at $16 trillion.