Question # 1

When a market is contestable , incumbent firms must.________ to avoid the entry of new competitors.

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Behave like competitive firms

Agree to act together

Differentiate their products

Practice price discrimination

The equilibrium price clears the market it is the price at which.

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Everything is sold

Buyers spend all their money

Excess demand is zero

c and d

In the classical model, potential output can not be increased by

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Monetary growth

Better technology

More capital

higher labour supply

At the intersection of AD and AS equilibrium is achieved in.

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The goods market

The money market

The labour market

All of the above

A tariff causes domestic firms to __________ and consumers to

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Overproduced, under consume

overproduce , overconsume

Underproduce, under consume

underproduce, overconsume

The effect of a tax to offset a negative eternality will be to ________ price and ____ quantity.

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Reduce, reduce

increase, increase

Increase , reduce

reduce, increase

A monopoly may be self perpetuating because profits may be used for

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research

Cost saving

Technical advance

All of the above

If goods are exported for less than society's marginal production cost and the marginal benefit to domestic consumers, it is likely that they benefit from.

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An import subsidy

A quota

Comparative advantage

An export subsidy

In an open economy leakages to imports ______ the value of the multiplier.

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Reduce

Increase

do not change

None of these

When investment is assumed to autonomous the slope of the AD schedule is determined by the.

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Marginal propensity to invest.

disposable income

Marginal propensity to consume

Average properisity to consume

When real income increases, other things equal we fan expect the demand for real money holdings to.

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Fall

Not change

Increase

Decrease

In a competitive industry each buyer and seller.

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Is a price taker

Produce different products

Believes that can influence price

Prevents the entry of competitors

In the event of an increase in the international price of oil that encouraged the central bank to accept lower real interest rates, inflation would most likely.

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Fall

Increases

Remain the same

Fluctuate

Economics assumes that people consume goods and services to achieve.

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Status

Prestige

Utility

Self esteem

In the short run the level of floating exchange rates is determined mainly by.

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Interest rates

Competitiveness

Trade

Speculation

Leakages from the circular flow are____ and _____

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Investment savings, government expenditure

Saving , taxes net of subsidies, imports

Consumption, investment , government expenditure.

Consumption, taxes, impports

Comparing a monopoly and a competitive firm the monopolist will.

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Produce less at a lower price

Produce more at a lower price

Produce less at a higher price

Produce less at a lower price

If your income doubles and the prices of the goods you buy double, then your demand for these goods will likely

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Increase

Not change

Decrease

Shift

Floating exchange rates are __ in the short run

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Stable

Volatile

Predictable

Depreciating

Women and non whiles on average receive lower comes than white men because.

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They tend to work in relatively unskilled jobs

Educational disadvantage

Firms are reluctant to invest in training

All of the above

All of the following are benefits of the single market except.

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It allows countries to exploit their comparative advantage, more fully

Firms could more readily exploit economies of scale

It intensified competition

It is easier book holidays in member countries.

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