The real balances effect is caused by an inverse relationship between the price level and the real value of financial assets with fixed nominal value
a. True
b. False
Indicate whether the statement is true or false
True
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The major difference between monopolistic competition and monopoly is
A) monopoly is a price setter and a firm in monopolistic competition is a price taker. B) only a monopoly can earn an economic profit in the long run. C) only a firm in monopolistic competition can earn an economic profit in the short run. D) how the quantity of output is determined. E) only firms in monopolistic competition are protected by barriers to entry.
One timing problem in using fiscal policy to counter a recession is the "recognition lag" that occurs between the
A. time the need for the fiscal action is recognized and the time that the action is taken. B. start of a predicted recession and the actual start of the recession. C. start of the recession and the time it takes to recognize that the recession has started. D. time fiscal action is taken and the time that the action has its effect on the economy.