If product markets become less competitive and the markup rises, we wouldexpect:a decrease in the interest rate in the medium runno change in output in the medium runa decrease in the real wage in the medium runO no change in the real wage in the medium runO an increase in the aggregate price level as output increases

A competitive market is a construction wherein no single buyer or maker has the ability to impact…

Answered: O a decrease in the interest rate in…

O a decrease in the interest rate in the medium run O no change in output in the medium run O a decrease in the real wage in the medium run O no change in the real wage in the medium run

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.

Question

If product markets become less competitive and the markup rises, we would
expect:
a decrease in the interest rate in the medium run
no change in output in the medium run
a decrease in the real wage in the medium run
O no change in the real wage in the medium run
O an increase in the aggregate price level as output increases

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