(1)Which of the following is correct?: A) real interest rate = nominal interest
ID: 1173878 • Letter: #
Question
(1)Which of the following is correct?:
A) real interest rate = nominal interest rate/anticipated inflation rate B) real interest rate = nominal interest rate * anticipated inflation rate C) real interest rate = nominal interest rate + anticipated inflation rate D) real interest rate = nominal interest rate - anticipated inflation rate.
(2)Which of the following has the highest Herfindahl-Hirschman index?:
A) monopoly B) Any of these, depending on the size of firm sales C) monopolistic competition D) oligopoly
(3)Which of the following is TRUE?
A) Price discrimination occurs when there are differences in prices that reflect differences in marginal cost. B) Charging all customers the same price when costs vary can actually be a case of price discrimination. C) Monopoly results in a higher quantity of output being sold compared with perfect competition. D) Price discrimination guarantees that the monopolist will make a profit.
(4) Legal or governmental restrictions that give monopolistic advantages to a firm include all of the following EXCEPT:
A) exclusive ownership of an unimportant resource. B) patents. C) franchises. D) environmental protection.
Explanation / Answer
a) "D"
real interest rate = Nominal interest rate - anticipated interest rate.
b) "A"
A monopoly will have the highest market concentration and hence the highest index value.
c) "D"
Price discrimination happens only in a monopoly and it ensures that the monopoly will make a profit in any case.
d) "Exclusive ownership of an unimportant resource" will not give any advantage to the monopoly. The answer is "D".
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