Baumol and Blinder argue that oligopolies are interdependent firms. What do they mean by this? Give three examples of the types of interdependence which might occur
Oligopolists are few in number, and they can closely watch each other. In this case, strategic behavior can be expected. When considering oligopolies, competition tends to resemble military campaigns, rather than the impersonal perfect competition considered earlier.
The several types of oligopoly models are an indication of the types of interaction between firms. Specifically, firms will observe the price of rivals-they may match price (such as price leadership), or only some price changes (kinked demand curve). Second, they will watch the quality of rivals' goods (differentiated oligopoly). Third, they will observe rivals' advertising and may counter with their own (differentiated oligopoly).
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Other things the same, if the price level rises, then domestic interest rates
a. rise, so domestic residents will want to hold more foreign bonds. b. rise, so domestic residents will want to hold fewer foreign bonds. c. fall, so domestic residents will want to hold more foreign bonds. d. fall, so domestic residents will want to hold fewer foreign bonds.
If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will:
A) export both sweaters and machinery to Britain. B) import both sweaters and machinery from Britain. C) export sweaters to Britain and import machinery from Britain. D) import sweaters from Britain and export machinery to Britain.
Which of the following statements is correct about Temporary Assistance to Needy Families (TANF)?
A. Families may not receive benefits for longer than 60 months. B. The Federal program determines eligibility and benefit levels with no discretion left to the state. C. Unwed teenage parents receiving benefits must live in public housing. D. Parents with children under age one must work 20 hours per week to receive benefits.
Refer to the information provided in Figure 23.3 below to answer the question(s) that follow.
Figure 23.3Refer to Figure 23.3. In this economy, aggregate saving will be zero if income is
A. $100 billion. B. $200 billion. C. $300 billion. D. $400 billion.