1.If the Reserve Bank wants to raise the cash rate, it:

Select one:

A.instructs large commercial banks to sell government securities in the open market.

B.sells government securities in the open market.

C.buys government securities in the open market.

D.tells large commercial banks to raise their interest rates.

E.sells government securities in the foreign exchange market.

2.If a firm in a perfectly competitive market faces an equilibrium price of $5, its marginal revenue:

Select one:

A.will be less than $5.

B.may be either greater or less than $5.

C.will be any amount but $5.

D.will also be $5.

E.will be greater than $5.

3.An example of a good with external benefits is:

Select one:

A.a pair of running shoes.

B.an imported good.

C.a dose of flu vaccine.

D.a sewing machine.

E.a pizza.

An example of automatic fiscal policy is:

Select one:

A.Parliament passing a tax rate reduction package.

B.the Reserve Bank reducing interest rates as economic growth slows.

C.the Commonwealth government expanding spending at the Department of Education and Training.

D.expenditure for unemployment benefits increasing as economic growth slows.

E.a change in taxes that has no multiplier effect.

When a firm maximises its profit, which of the following is correct for firms in monopolistic competition and perfect competition?

Select one:

A.P = ATCalways for firms in both perfect competition and monopolistic competition.

B.P=MCfor both types of firms.

C.P=MR=MCfor firms in perfect competition, andP>MR=MCfor firms in monopolistic competition.

D.P>MR=MCfor firms in both perfect competition and monopolistic competition.

E.MR=MCfor firms in perfect competition andMR>MCfor firms in monopolistic competition.